PRENEED FUNERAL ACTUAL FINALS QUESTIONS
AND ANSWERS SET A+
✔✔What is one funding mechanism for preneed accounts? - ✔✔Trust Accounts.
✔✔What is a trust account in the context of preneed funding? - ✔✔An account created
by one person to be held for the benefit of another, usually managed by a funeral
establishment.
✔✔What is the purpose of escrow accounts in preneed arrangements? - ✔✔A third-
party holds the funds until both parties fulfill their contractual obligations.
✔✔What is burial insurance? - ✔✔Insurance where consumers pay premiums, and
upon death, it pays a lump sum for funeral expenses.
✔✔What distinguishes funeral insurance accounts from burial insurance accounts? -
✔✔Funeral insurance accounts usually include preneed arrangements with preselected
goods and services.
✔✔What is a key feature of funeral insurance accounts? - ✔✔They offer consumers the
opportunity to make payments over time for funeral expenses.
✔✔What activities may funeral directors be allowed to do regarding funeral insurance? -
✔✔Sell funeral insurance, become funeral insurance agents, receive commissions, and
be named as beneficiaries.
✔✔What is one advantage of funeral service accounts over other account types? -
✔✔Funeral directors can receive upfront commission payments as insurance agents
where allowed.
✔✔How is interest earned on trust accounts taxed? - ✔✔It is taxed as ordinary income.
, ✔✔What is a key tax benefit of insurance accounts compared to trust accounts? -
✔✔The accrual of benefits is usually non-taxable for income tax purposes.
✔✔What is a joint account in the context of funeral institution accounts? - ✔✔An
account that allows access to funds under 'right of survivorship' rules.
✔✔What does TOD stand for in funeral accounts? - ✔✔Transfer on death.
✔✔What does POD stand for in funeral accounts? - ✔✔Payment on death.
✔✔What do private companies offer regarding preneed funds? - ✔✔They administer
preneed funds for funeral establishments.
✔✔What is the typical model under which preneed companies operate? - ✔✔The trust
fund model, making full funeral arrangements prior to the time of need.
✔✔What do states regulate regarding preneed account portability? - ✔✔They enact
consumer protections for transferring preneed contracts and related funds.
✔✔What is required during a prepaid preneed arrangement conference? - ✔✔A funeral
director agrees to provide goods and services, documented in a contract signed by the
parties.
✔✔What happens in a pre-planning conference that is not prepaid? - ✔✔The funeral
director reviews options and prepares a written summary without signing a contract or
receiving payment.
✔✔Where can arrangement conferences be held? - ✔✔In any suitable location, subject
to FTC Cooling-off Rule if not in a funeral establishment.
✔✔What does the FTC Cooling-off Rule regulate? - ✔✔It regulates door-to-door sales
and requires written notice of the right to cancel a contract.
✔✔What is the General Price List (GPL) required to include? - ✔✔Types of funerals,
specific goods or services offered, and prices.
✔✔What must GPLs include for preneed arrangements? - ✔✔The same information,
disclosures, and statements required for at-need arrangements.
✔✔What is required before consumers enter a selection room for preneed
arrangements? - ✔✔They must be provided with a casket price list and an outer burial
container price list.
AND ANSWERS SET A+
✔✔What is one funding mechanism for preneed accounts? - ✔✔Trust Accounts.
✔✔What is a trust account in the context of preneed funding? - ✔✔An account created
by one person to be held for the benefit of another, usually managed by a funeral
establishment.
✔✔What is the purpose of escrow accounts in preneed arrangements? - ✔✔A third-
party holds the funds until both parties fulfill their contractual obligations.
✔✔What is burial insurance? - ✔✔Insurance where consumers pay premiums, and
upon death, it pays a lump sum for funeral expenses.
✔✔What distinguishes funeral insurance accounts from burial insurance accounts? -
✔✔Funeral insurance accounts usually include preneed arrangements with preselected
goods and services.
✔✔What is a key feature of funeral insurance accounts? - ✔✔They offer consumers the
opportunity to make payments over time for funeral expenses.
✔✔What activities may funeral directors be allowed to do regarding funeral insurance? -
✔✔Sell funeral insurance, become funeral insurance agents, receive commissions, and
be named as beneficiaries.
✔✔What is one advantage of funeral service accounts over other account types? -
✔✔Funeral directors can receive upfront commission payments as insurance agents
where allowed.
✔✔How is interest earned on trust accounts taxed? - ✔✔It is taxed as ordinary income.
, ✔✔What is a key tax benefit of insurance accounts compared to trust accounts? -
✔✔The accrual of benefits is usually non-taxable for income tax purposes.
✔✔What is a joint account in the context of funeral institution accounts? - ✔✔An
account that allows access to funds under 'right of survivorship' rules.
✔✔What does TOD stand for in funeral accounts? - ✔✔Transfer on death.
✔✔What does POD stand for in funeral accounts? - ✔✔Payment on death.
✔✔What do private companies offer regarding preneed funds? - ✔✔They administer
preneed funds for funeral establishments.
✔✔What is the typical model under which preneed companies operate? - ✔✔The trust
fund model, making full funeral arrangements prior to the time of need.
✔✔What do states regulate regarding preneed account portability? - ✔✔They enact
consumer protections for transferring preneed contracts and related funds.
✔✔What is required during a prepaid preneed arrangement conference? - ✔✔A funeral
director agrees to provide goods and services, documented in a contract signed by the
parties.
✔✔What happens in a pre-planning conference that is not prepaid? - ✔✔The funeral
director reviews options and prepares a written summary without signing a contract or
receiving payment.
✔✔Where can arrangement conferences be held? - ✔✔In any suitable location, subject
to FTC Cooling-off Rule if not in a funeral establishment.
✔✔What does the FTC Cooling-off Rule regulate? - ✔✔It regulates door-to-door sales
and requires written notice of the right to cancel a contract.
✔✔What is the General Price List (GPL) required to include? - ✔✔Types of funerals,
specific goods or services offered, and prices.
✔✔What must GPLs include for preneed arrangements? - ✔✔The same information,
disclosures, and statements required for at-need arrangements.
✔✔What is required before consumers enter a selection room for preneed
arrangements? - ✔✔They must be provided with a casket price list and an outer burial
container price list.
