Just last week I was spouting the need for pre-planning and pre-paying for your own funeral. I still feel that it's a good concept however there are some aspects which I failed to tell you. You see, not every funeral home, director or state for that matter treats pre-need the way I do. Not that I'm doing anything against the law, quite the opposite, I'm not taking advantage of the existing laws. I have to believe that the way I handle it is the right way, maybe not the most profitable way, but sorry, this time I think I'm totally right no matter what the law. I'm the one who has to be able to sleep at night after dealing with a family not some law maker...anyway...
The financial concept is pretty simple. We offer and contract services for you at today's prices. You then have the option of making the contract "standard", meaning that the prices are not guaranteed to stay the same (and unless you die within the year probably wont) or "inflation-proof" meaning that the prices are guaranteed to be the same prices as today forever. A big difference between the two contracts is that the standard contract can and usually is "revocable" while the inflation-proof is usually "irrevocable". Getting confusing? It's really not. The way that we can guarantee prices without going under is that the funds are invested, in your name as either a trust or insurance policy and we then hope and pray that the interest/dividends keep up with inflation. That increase is what we use to offset the price differentials. What I do if the investment instrument happens to pay more than the price increases is simply refund the difference to the family. Now, here's the kicker.
The law says that we funeral directors are able to keep 10% of the contract annually as an administration fee. My take on that is that I don't feel I have the "right" to take money that truly doesn't belong to me yet. The other biggie that I failed to mention is that some states, New York being one of them, do not allow funeral directors to refund any excess monies to families on pre-need contracts. What the state requests is that any excess funds be sent to them...so...what these bright funeral directors do is make sure that there is absolutely no money left over, ever. Sound legit to you? I sure am glad I no longer practice in a state that works this way. All I know is that "the concept is good". Just please beware of the fine print and ask a million questions. Make sure you know what you're getting into and don't accept any answers that don't really answer your questions. If they can't satisfactorily answer your concerns, go elsewhere.
The financial concept is pretty simple. We offer and contract services for you at today's prices. You then have the option of making the contract "standard", meaning that the prices are not guaranteed to stay the same (and unless you die within the year probably wont) or "inflation-proof" meaning that the prices are guaranteed to be the same prices as today forever. A big difference between the two contracts is that the standard contract can and usually is "revocable" while the inflation-proof is usually "irrevocable". Getting confusing? It's really not. The way that we can guarantee prices without going under is that the funds are invested, in your name as either a trust or insurance policy and we then hope and pray that the interest/dividends keep up with inflation. That increase is what we use to offset the price differentials. What I do if the investment instrument happens to pay more than the price increases is simply refund the difference to the family. Now, here's the kicker.
The law says that we funeral directors are able to keep 10% of the contract annually as an administration fee. My take on that is that I don't feel I have the "right" to take money that truly doesn't belong to me yet. The other biggie that I failed to mention is that some states, New York being one of them, do not allow funeral directors to refund any excess monies to families on pre-need contracts. What the state requests is that any excess funds be sent to them...so...what these bright funeral directors do is make sure that there is absolutely no money left over, ever. Sound legit to you? I sure am glad I no longer practice in a state that works this way. All I know is that "the concept is good". Just please beware of the fine print and ask a million questions. Make sure you know what you're getting into and don't accept any answers that don't really answer your questions. If they can't satisfactorily answer your concerns, go elsewhere.
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