Pre-need Funeral Contracts

Essay by tikijose11University, Bachelor'sA+, April 2006

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Funeral service is in the midst of several vast transitions from the traditional ideas once held by its professionals. So many new trends are creating a stir within the industry. Among the controversial topics in the funeral profession, pre-need funeral contracts are at the top of the list.

Pre-need is defined as, "Funeral arrangements made in advance of need". There are two distinct types of pre-need contracts, the first of which is the pre-funded funeral arrangements. Pre-funded funeral arrangements are, "those funeral arrangements made in advance of need that includes provisions for funding or prepayment". The other type of pre-need contracts is that which does not require the consumer to include monies to cover the funeral costs at time of death. For the purposes of this paper, the writer is strictly concerned with the division of pre-need that requires pre-funding.

In the past, it was customary for a funeral director to manage a pre-need account.

The funeral director would take charge of the money in a pre-funded contract and invest it at his or her own discretion. Several problems arose with this format.

Eventually, a more standardized format for pre-need contracts emerged, which involved third party trust accounts, or an insurance account. Within the past year, the pre-need market has had a huge breakthrough. It was determined by several interested groups of Pennsylvania that:

There is a strong sentiment within the funeral industry on the need to reform pre-need regulation: The inadequacy of current pre-need regulation was the problem most frequently cited during the audit by Board members, licensees, prosecutors, the Pennsylvania Funeral Directors Association, and the American Association of Retired Persons (

In Pennsylvania, it is now possible for a licensed insurance agent to sell a pre-need funeral account, without the need for a funeral director to be present...