A local Kansas City television station recently ran a story about a consumer’s complaint that his preneed contract did not cover “surprise fees”. The consumer had purchased the preneed contract from a Kansas City funeral home/cemetery combo where he had also purchased a grave space. One fact regarding the preneed contract that jumped out to us was that the combo had given the consumer 12 years to pay for the contract. The length of the installment period allowed the consumer to make low monthly payments that he could afford. When the consumer finally completed the monthly payments, the funeral home/cemetery sent a reminder that certain final expenses would still be owed at the time of his need. The greatest of those expenses would be the opening and closing of the grave space. The consumer was shocked that the purchase of grave space did not include the opening and closing services.
The story struck close to home for me. When my mother recently passed away, my sister expressed her own surprise about funeral and burial costs not covered by my mother’s preneed arrangements. As my mother’s power of attorney, my sister had purchased a non-guaranteed preneed contract in a spend down situation. My mother’s health required that she move into a nursing home and qualify for public assistance. After making my mother’s prearrangement, my sister asked that I come to the funeral home to explain the contract. My mother was never a planner, or saver, and had little in resources. Her savings were not sufficient to cover a basic cremation, and my sister did not know when my mother might receive additional funds. So, a non-guaranteed contract was my sister’s only option.
When my mother did pass, the preneed contract trust value was not sufficient to cover the cost of my mother’s cremation, let alone the inurnment services and the price of a marker. My sister became very upset. Understanding that my sister was struggling with grief, the funeral director and the cemeterian were very patient with her and discounted their services. But, the reality was that my sister had ample notice that there would be additional expenses.
Back to last week’s television report, Channel 41 made the local funeral home/cemetery (and the death care industry at large) look to be a bad guy. The station’s reporting was flawed on several points. If the station had performed any due diligence, the reporter might have learned that Missouri funeral homes and cemeteries are governed by two different preneed laws. The station neglected to report that Missouri cemeteries could not sell opening and closing services at the time the consumer purchased his preneed contract. While Chapter 214 was re-written in 2010 to allow such sales, low investment returns have discouraged Missouri cemeteries from offering those services on a preneed basis. So, there was a good legal reason why the preneed contract excluded opening and closing services.
Cemeteries also make disclosures in other documents that the purchase of a grave does not include the opening and closing services. Such disclosures are typically made in the interment sales document, the cemetery’s rules and regulations, and the interment rights assignment form. The station was disingenuous when including the consumer’s remarks to the otherwise and characterizing the preneed contract disclosure as buried in fine print.
Funeral homes and cemeteries routinely deal with consumers who have not read their preneed contract. As addressed in a post made a few years ago (Consumers: Reading the Bold Print), the industry can only go so far to disclose what is and is not covered by the contract. The industry takes grief into account when responding to such situations. But grief is no defense to a consumer who neglects to read the contract prior to the time of need.
To compound their bad reporting, Channel 41 patted themselves on the back for saving this consumer unnecessary expense, suggesting that they had saved thousands. But, the ‘surprise fees’ described by the reporter included cash advance items that are always at the consumer’s discretion. The reporter may not have been aware that there are installment costs to the funeral home. Many funeral homes will not offer installment plans because of the investment loss associated with deferring payment on a guaranteed contract. This particular contract probably cost the funeral home hundreds of dollars.