Scheduled inspections are performed at least annually and the inspector focuses on a specific report call a preneed. The state funeral directors and morticians are licensed and are required to complete at least 5 hours of continuing education annually. North Carolina funeral homes are allowed to offer two types of contracts for funeral pre-planning that are called a preneed. A preneed allows a client especially if death comes years or decades later. The client may pay the funeral home on a regular basis until the contract obligation is met. When a standard contract is paid-in-full, it then converts to an inflation-proof contract.
The inflation-proof contract protects the client’s family from paying more for the funeral/cremation if death comes many years or decades later. The inflation proof does require payment of all services and merchandise at time of contract. However, the funeral home does retain any interest earned on the funds paid by the client to help offset the cost of inflation. Which makes sense from a business standpoint because the funeral home would lose money over time and quite frankly, current interest rates on savings do not keep up with the rate of inflation. A contract may be transferred to another funeral home as long as the new funeral home has a preneed establishment license. In addition, the original funeral home may keep 10% of the funds deposited for the preneed.Another type of preplanning is called prearrangement. A prearrangement is not a contract. This type of preplanning allows a client to choose merchandise and services prior to death and the family pays at time of death, usually with a life insurance policy or money saved for final expenses. No money is exchanged up front.
Because the prearrangement is not a contract, it is not legally binding.
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