If making arrangements for your end-of-life has been on your mind, you are probably not alone. These arrangements may not be easy to make for many of us because there are so many aspects to consider. One thing you may want to think about is whether you will pre-arrange your funeral service and how to pay for it. There are a variety of options and in this blog post, we will explain the differences between a preneed contract and life insurance.
A preneed cemetery services or funeral services contract is a future performance contract that provides for cemetery or funeral services. This type of contract is arranged while the person is alive and are regulated in BC under the Business Practices and Consumer Protection Act, the Cremation, Interment and Funeral Services Act and the Consumer Contracts Regulation.
Preneed Contract (cash, up-front)
With this type of preneed contract, you pre-arrange for your end-of-life goods and services. You may pay up-front for the arrangements and the funeral services provider of your choice must put 80% of the money in trust within 30 days of signing the contract until the funds are needed.
A preneed cemetery or funeral services contract may be cancelled at any time by the purchaser or by the personal representative of the deceased; however, you may lose up to 20% of the total cost of the contract. Be aware that items that are personalized or unique may not be refundable.
There is more to know about these types of arrangements so we encourage you to do your research. You can also find out more about your preneed cemetery or funeral services contract rights in this blog post.
Preneed Contract (insurance)
While Consumer Protection BC is not responsible for regulating this part of preneed contracts, preneed insurance is also available as an option. With this type of insurance, you are buying insurance specifically for cemetery or funeral related goods and services. You may make monthly payments for this insurance.
Life insurance provides a financial payment to your beneficiary upon your death. When you buy a life insurance policy, your estate is the beneficiary. The insurance company pays the amount of your insurance to the beneficiary after your death which then may be used for paying for your cemetery or funeral services. Consumer Protection BC does not have any oversight over life insurance, however information can be found on the Financial Consumer Agency of Canada website.
Of course you can also choose to save the money yourself to cover your end of life arrangements. The decision is yours. Whichever option you decide to go with, here are some tips when making end-of-life arrangements:
Tip 1: Ensure you understand what you are signing. Whether it’s a preneed contract or life insurance, there is a lot to learn so do your research. You may also want to ask your friends and family to hear about their experiences.
Tip 2: Find out about your cancellation rights. Always read all the fine print in the contract and in particular, the cancellation terms.
Tip 3: Ask questions of the business or insurance provider. If you are unsure about something, don’t hesitate to ask or visit several businesses to make the decision for you and your loved ones.
Tip 4: Tell your loved ones what plans you have made and where your paperwork is located.
Funeral directors, providers and embalmers as well as cemetery and crematorium operators are required to be licensed with Consumer Protection BC. To find a licensed provider please visit this page on our website.
We hope you find information in this blog helpful and you are on your way to making the right decision whatever that may be for you. For more information about BC’s funeral services, explore our blog on this topic.