Guaranteed / Non-Guaranteed Prepaid Funeral Services & Merchandise
Some prepaid funeral goods and services are considered frozen in price while others are not in accordance with Section 154.1511 of the Texas Finance Code. Prepaid funeral contracts written after September 1, 2009 generally have two sections to itemize goods and services to be delivered: Section A is reserved for “Guaranteed Services and Merchandise” while Section B is for “Non-Guaranteed Cash Advance Items.” Prior to September 1, 2009, all prepaid funeral contract pricing was guaranteed or frozen; however, funeral providers were reluctant to include items on prepaid funeral contracts over which they had little price control such as flowers, cemetery or crematory fees, obituary notices and death certificates. These goods and services are commonly referred to as cash advance items as the funeral provider advances funds to a third party on behalf of the purchaser for the acquisition of these items. However, although non-guaranteed items are allowed to be included on prepaid funeral contracts written after September 1, 2009, some funeral providers have opted to continue to either exclude or guarantee these items.
Guaranteed Services and Merchandise
Section A of the prepaid funeral contract titled “Guaranteed Services and Merchandise,” allows for the purchaser to select the merchandise and services that they want to be delivered at the time of the beneficiary’s death, such as a casket, use of funeral facilities, staff and transportation services. Guaranteed services and merchandise are typically provided directly by the funeral provider rather than a third party. These items - or comparable items - must be delivered at the time of death at no additional cost, regardless of price increases over time as long as you follow the terms and conditions of the prepaid funeral contract and the related insurance policy, if applicable. (If the prepaid contract is funded by an annuity or insurance policy, the price guarantees are in jeopardy if the funeral provider goes out of business and another provider cannot be secured to honor the contract. See the "Information About Prepaid Funeral Planning" Brochure for further discussion of this topic.)
Non-Guaranteed Cash Advance Items
Section B of the prepaid funeral contract titled “Non-Guaranteed Cash Advance Items,” allows for the purchaser to set aside funds for all or any portion of the estimated cost of cash advance items, the actual cost of which will be determined by existing prices at the time the items are delivered. Cash advance items are typically goods or services that are provided by another party, such as florists, police escorts, and operators of cemeteries, crematories and newspapers. After the death of the beneficiary, the funeral provider pays for these items on the purchaser’s behalf to third parties. The funeral provider is required to apply the funds and the proportionate part of the income on deposit or insurance policy proceeds for these items to the current purchase price for the items. Any price increase on non-guaranteed cash advance items between the date of the prepaid funeral contract and the date of the funeral must be paid to the funeral provider at the time of the service. However, the funeral provider must provide a refund if the proceeds exceed the current price of the non-guaranteed cash advance items.