COLUMN:

Buyer beware for prepaid funeral plans in Hawaii

By Percy Ihara

Purchasing your last piece of real estate in Hawaii may be more costly than you think. Do you own your own funeral plot? Did you prepay for your casket or funeral service? By doing this, you either prepaid or pre-arranged for these products and services.

“Preneed” is a term coined by the funeral industry to describe the arrangement and payment of a funeral prior to your death. To have any say in arrangements at your time of death, you must plan in advance. “Prearrangement” is also used interchangeably with “preneed”.

Pre-planning is a good idea; however, prepaying in Hawaii is not. Both AARP and Consumer Reports advise that you should not prepay. The major problem with prepaying in Hawaii is the funeral homes automatically take a 30 percent non-refundable commission off the top. That is a huge commission for not delivering any goods or services. All they have done is write up a contract.

What about locking in today’s price or the argument that funeral prices are going up all the time? You can maintain control over your money with a pay on death account and the accrued interest will cover increased costs. The price of a direct cremation has actually come down over the last 10 years on Oahu due to healthy competition in that market. You can also make monthly transfers to a pay-on-death account.

Hawaii has some of the worst laws in the country when it comes to consumer protection and prepaid funeral plans.

One example of Hawaii’s inadequate law is that if you are on a payment plan to purchase your funeral arrangements and you fail to make just one payment, the funeral companies can cancel your entire funeral plan and are allowed to keep all your money with no refund. This sounds like an extreme example but this is happening in Hawaii and consumers need to be careful. Hawaii’s legislature is working to improve this law and protect consumers; however, without public outcry this may take awhile.

For those of you who have funeral plans we have some tips for you.

First, if you already have a prepaid funeral plan make sure you and your family know where the contract from the funeral home is and that it reflects that it is paid in full. There are cases where the funeral homes have not honored a plot or funeral service without the contract. If you don’t have children leave a copy with close friends. I think the resident manager or assisted living center would be happy to keep a copy on file where you reside.

Second, according to Sarah Robinson of the Funeral Consumers Alliance of Hawaii, make it clear to your family the only money they should have to pay is the General Excise Tax, not one penny more for a casket or urn. Most caskets and urns are available for three to five years, the same amount of time most people take to pay for their funeral plan.

When the death occurs the mortuary will often substitute an inferior product or a really ugly color telling the family they can upgrade for so much more. The salesperson also stresses what a great deal the family is getting and how much more it would cost today; what they’re failing to tell the family is how much interest their parents’ money has earned, and how much money the mortuary is keeping.

For those of you who are in the planning stages here are a few tips to consider:

Pre-planning is important as it is your funeral plan and you decide what you want and don’t want. If the survivors know what the deceased wanted, it makes it easier to “shop” for services. There is nothing wrong or shameful with shopping around and staying within a budget.

There is nothing wrong with believing the money can be better spent on the living or college tuition for a grandchild or donating it for a park bench. If you have no idea what you want when you walk through the door, you can and probably will be talked into more elaborate services. Remember, the person you will be talking to at the funeral home is a salesperson and he/she is there to sell you services whether you need them or not.

If you still think you want to purchase a pre-need plan, here are a few questions to ask the salesperson:

Does the contract describe in detail the type of casket or urn I’ve purchased?

Do I have to pay in full in order for the plan to take effect?

Ask about the 30 percent off the top fee. Where does this money go?

What is the cancellation policy?

Do they allow auto pay through your checking account?

What happens if I move? What is their refund policy after paying in full?

What happens if the casket I select is no longer made?

Will they sell you a direct cremation with no services?

Funeral Consumers Alliance has available a Mortuary Price Survey for the state of Hawaii which lists the “Direct Cremation” and an “Immediate Burial” prices along with the phone numbers and addresses of the business. This will help avoid buying into flashy advertisements and fancy services.
Hawaii’s seniors are the largest group of consumers buying these types of services and need to be aware of their rights and be protected. Planning your funeral in advance and comparison shopping for prices and services is important for any large purchase and funerals are no exception.

Do your homework and be careful when prepaying for a funeral. Understand and read carefully along with the fine print the contract before signing. Remember, you can pre-pay yourself with a pay on death account and maintain control over your funds at all times.

For more information you may contact the non-profit educational organization, Funeral Consumers Alliance Hawaii, at 638-5580. Their mission is to encourage dignity, simplicity and economy for death and its approach.

They will help in planning your final arrangements, offer information on your legal rights, provide a price survey and they are an advocate for you in resolving problems with a funeral home or in filing a consumer complaint.

This is the first of a regular series of articles in Generations Hawaii Magazine to provide information and resources to help seniors live a better quality of life. Percy Ihara is the host of Today’s Kupuna television series which airs every Wednesday night at 7 on Olelo’s channel 52.

back to top

© Copyright Generations Hawaii. Designed by Trade Publishing