Preneed Funeral Bond

Most people don't like to think about ever needing funeral home services. People's fear of death can result in a lack of preparation when the time comes to deal with such occasions, and unfortunately this often means more work for whoever is left behind. Solving this problem is as simple as creating preneed funeral arrangements. Funeral homes offer this service to ensure the deceased's wishes are carried out and to ease the family's burden.

Typically the person who executes pre-need services with the funeral home enters into a contract that clearly spells out how his or her remains will be handled. Services are generally prepaid to fulfill the contract and make the process easier after the person dies.

Protection

Most states and localities require a special type of surety bond called a preneed funeral bond to make sure funeral homes maintain their contracts and conduct business ethically. These bonds make the funeral home liable for misappropriated funds or contract breeches. They also protect the public from dishonest or unethical business practices on the part of the funeral home.

Just as with other consumer-oriented bonds, the preneed funeral bond is a way for consumers to feel more confident about their purchases. The preneed consumer bond ensures that an impartial third party will step in between the consumer and funeral home should there be a dispute about the contract. This encourages consumers to do business with a reputable funeral home that executes bonds for each preneed funeral contract.

How it works

The funeral home purchases the bond according to the state or local government's limits. The home holds the bond until the service is complete and the contract is no longer necessary. Each bond is purchased through a bond company and is subject to approval based on the funeral company's own credit status and financial picture.

Getting the bond

Since the funeral home could owe the entire amount of the bond if there is a valid claim against it, it's important for the bond company to make sure that the company has the financial strength to pay the full face value of the bond. If the funeral home has poor or no credit, the bond purchase might have to be executed through a company who specializes in sub par credit bonds.