It is an all but too familiar news report about 60 Michigan preneed contract purchasers having lost all their money, the industry response described the protections afforded by state law.

The MFDA statement drew some rebuke on an industry chat page, including one post recommending that state FD associations take a greater role in educating the public. However, consumer advocate groups will readily acknowledge that “educating the public’ on the risks of the preneed transaction is a difficult task that often occurs after the fact.

The MFDA offers good advice regarding the protections provided by Michigan law, but consumer advocates would be more impressed if the association offered that same advice on their website, and through printed disclosures at member funeral homes.

Once the preneed contract is sold, the industry has long felt it was best to limit communications with the consumer. This ‘perception’ was reflected in the following assertion made in one of the lawsuits filed against the Illinois Funeral Directors Association:

One of the benefits of the Preneed Trust Tax-Exempt Fund was to avoid reminding the preneed customers of their own mortality with an annual mailing of an interest reporting form (Form 1099). The mortality concept has always been critical to the satisfaction of preneed customers insofar as it allowed choices to be made by the customers while sparing their survivors the emotional and financial obligations associated with a funeral. The tax-exempt option was and remains the preferred choice for approximately 75% of preneed customers.

But as the MFDA statement suggests, consumers are better protected when annual statements are provided. In contrast to the old perception, regular contact between the funeral home and the consumer could be used to strengthen the consumer’s loyalty with the funeral home. Such contact could also help reduce another age-old preneed problem: but Mom said her preneed contract took care of everything.