Exam (elaborations)
FUNERAL DIRECTING 1 - 5.1 QUESTIONS
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FUNERAL DIRECTING 1 - 5.1 QUESTIONS
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FUNERAL DIRECTING 1 - 5.1 QUESTIONSAccording to the lesson, what is the primary goal of arranging a funeral or memorial
service in advance? - Answers- to plan a meaningful service for the client family
When a pre-paid contract is "guaranteed" who usually retains any excess funds and
why? - Answers- the funeral home generally retains them because they assumed the
risk of guaranteeing the contract when it was originally written
Define a pre-need funeral trust. - Answers- a legal arrangement in which an authorized
trust company is allowed by law to fund predetermined expenses of a funeral,
cremation, or burial. Trust income (i.e. "interest") is subject to federal taxation; the
purchaser must pay income taxes on an annual basis.
Describe how an insurance assignment works when pre-paying for funeral services. -
Answers- the owner would purchase a life insurance policy and then transfer payment
of the death benefit to a funeral home
Define the term spend-down and when it occurs. - Answers- a process of ensuring
Medicaid and SSI eligibility through the reduction of assets and income below specific
limitations; common practice among families who need to qualify an elderly parent (or
relative) for this financial assistance
What is one area of expenses that is often not included in the guaranteed items of a
pre-paid funeral? - Answers- cash advance items
What is a potential drawback of trusts with regard to "trust income" (i.e. earned
interest)? - Answers- They're subject to federal taxation. Purchaser must pay income
taxes on an annual basis.
Define the term premium as it relates to an insurance policy. - Answers- specified
amount of payment required by an insurer to provide coverage under a given policy
What are the four general types of funding vehicles? - Answers- -trusts
-insurance
-annuity
-assignment
What is major advantage of using insurance as a funding vehicle with regard to earned
interest? - Answers- proceeds (interest) are not taxable as income
What term is used to describe a contract in which an individual pre-pays for a funeral
but does not select any services or merchandise? - Answers- non-guaranteed
What does a "90/10" law allow a funeral establishment to do? - Answers- requires only
90% of the funds be transfered
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