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Prepay your Funeral? Know Your Rights with Prepaid Contracts
National Consumer Protection Week is March 4-10
Media Contact: LARA Communications 517-373-9280
March 5, 2018 - Should you prepay your funeral? Consumers are urged to know their rights and make informed decisions regarding prepaid contracts of funeral and cemetery goods and services. LARA’s Corporations, Securities & Commercial Licensing bureau (CSCL) that oversees funeral homes and morticians, recognizes National Consumer Protection Week March 4-10.
“Prepaying for a funeral is a large financial commitment and a big decision that shouldn’t be made under pressure or on the spur of the moment,” said CSCL Director Julia Dale. “Do your research. Know who you’re doing business with, what you’re buying, and what happens to your money if you prepay funeral expenses, and if you can cancel the contract. Discuss it with your family.”
Michigan’s Prepaid Funeral and Cemetery Sales Act requires sellers of prearranged funeral and cemetery goods and services to be registered with the state. Funeral directors in Michigan are required to be tested, inspected, and licensed by the state. Pre-need sellers are separately registered, and their records are audited by the state on a routine basis. Some also hold insurance registrations and sell insurance policies that cover pre-need goods and services.
Before you sign or pay anything, here are tips to help you make an informed decision on a prepaid contract for funeral and cemetery services:
- Know who you are dealing with -- a funeral director, a cemetery salesperson or a commissioned pre-need seller. Are they reputable?
- Always verify with CSCL that the pre-need seller of funeral or cemetery goods and services is currently registered, and the funeral home or cemetery which is to provide the goods and services is licensed with the state. Check the license status of any funeral home at: www.mi.gov/licenselookup.
- Know what you are paying for (a casket and vault only, and/or funeral services?)
- Know if the prepaid contract you are considering is either guaranteed or non-guaranteed. A guaranteed contract ensures there will be no future additional costs charged for goods and services contained in the contract. However, any excess funds in escrow that are not used will not be refunded. A non-guaranteed contract provides that additional future costs may be charged to provide for the goods and services contained in the contract. Any excess monies in escrow, which were not needed to provide the contract’s items, will be refunded.
- Shop and compare prices offered by several funeral providers and cemeteries.
- Know what happens to the money you’ve prepaid and know what happens to the interest on that money.
- Know in advance who the escrow agent will be before purchasing a prepaid contract. All funds received in connection with a prepaid contract must be held in escrow by an escrow agent for your benefit, the contract beneficiary.
- Know your cancellation rights. Know if you can get a full refund if you cancel the contract, or if there’s a penalty and how much that penalty will cost you.
- Is the prepaid contract transferable if the funeral home or cemetery goes out of business or if you move or die while away from home?
- Read the prepaid contract carefully and have a clear understanding of it before you sign it.
- Get a copy of the prepaid contract you’ve signed. This is the only document that lists exactly what you have purchased. It is your right to receive a copy.
- Get confirmation from the escrow agent that your prepaid contract funds were deposited with them within the required 30-day timeframe. (This is not required when a non-guaranteed contract is purchased and the seller elects to be the escrow agent.)
- Make sure you receive a yearly statement from the escrow agent/financial institution holding your funds.
- Inform your family or designee that you’ve purchased a prepaid contract for your funeral or cemetery arrangements and where the documents are filed.
To help protect consumers against unscrupulous activity when making final arrangements, CSCL has taken disciplinary action against the mortuary science licenses of several individual funeral directors for violations of Michigan’s Prepaid Funeral and Cemetery Sales Act, including misappropriation of monies involving prepaid funeral sales. CSCL has also revoked and suspended licenses of funeral homes around the state for failure to properly place into an escrow account fund related to prepaid funeral contracts. Monthly disciplinary action reports can be reviewed at www.mi.gov/cscl; click on “Complaints,” “Disciplinary Action Reports,” and then on “Licensing Reports.”
For more information about LARA, please visit www.michigan.gov/lara
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