Caution advised on prepaid funeral plans

Funerals are a unique purchase, involving both financial and emotional issues. Decisions often are made while under the emotional strain of bereavement, when emotions can cloud our better judgment. Grief can affect your normal ability to make careful, informed decisions.

To make it easier on survivors, many seniors opt for what's called a "preneed plan," which involves making advance planning of funeral arrangements and pre‑paying for merchandise and services.

Advance arrangements can provide peace of mind and relieve survivors of responsibilities at a very heart‑rending time. Also, deciding how to pay for the funeral while still healthy can also be smart. But everybody needs need to be careful to avoid fraud and price‑gouging. Because there is potentially a time lag of years between purchase of a plan and the purchaser's death, fraudulent sellers can vanish with your money before their fraud is uncovered.

Preneed plans can be funded in several ways: a lump sum or payments over a number of years to a funeral home, or through a trust or savings account, or through a life insurance policy. Several state laws require a funeral home or cemetery to place a percentage of the money in a regulated trust or purchase a life insurance policy with the death benefits assigned to the funeral home or cemetery.

But there are a variety of dangers associated with prepaying. In the worst case, you could be charged exorbitant finance fees on a multi‑payment plan, or your money could be tied up in an account or insurance policy earning less than the market rate with no price guarantee and limited in use to only one funeral home ‑‑ with a substantial penalty for cancellation.

Another possible abuse could include unexpected expenses: the purchaser's survivors, including the estate's executor, will discover that a plan does not cover all funeral and burial expenses.

What's important to seniors dealing with death is being informed, having an education as to how to deal with these decisions, having things written down and having options. Here are a few recommendations from the BBB.

‑‑ Shop around. Ask friends, relatives, co‑workers and your physician for recommendations.

‑‑ Be sure to compare prices. Costs for funeral merchandise and services can vary drastically. Reputable companies will itemized cost disclosures

‑‑ Know what's included, and not included in the contract. Review it carefully. Review all documents with a knowledgeable friend, relative, attorney or financial adviser. Avoid any salesman who stonewalls if you ask to take the contract home to study it.

‑‑ Stay away from sellers of preneed plans who use high‑pressure sales techniques, and who try to convince you to buy the most expensive goods and services. Sellers will often put profit ahead of consumer needs.

‑‑ Visit the facility yourself. Do not trust the person selling the plan, especially if it's a door‑to‑door sales pitch.

For additional consumer protection information, visit www.bbb.org or contact the Better Business Bureau (BBB) by phoning (858) 637-6199 during regular business hours. Or, call the BBB's 24-hour Consumer Helpline at (858) 496-2131 or 1-800-600-7050 to obtain free information on local companies along with a list of BBB accredited businesses in a particular type of industry.