Best California State Regulated Burial Plans

Written by Jeff Root

In California, the authority for that regulates, investigates complaints and licenses funeral personnel is the California Department of Consumer Affairs Cemetery and Funeral Bureau.

To accomplish the tasks laid out for them, the bureau has a staff of field representatives throughout the state and office staff in Sacramento. The bureau also employs students, and has a full board in an advisory capacity.

In California, the law states that if you die and don’t leave enough money to cover funeral costs, than your nearest relatives must pay for the cost of the funeral. This makes burial insurance very important.

With the cost of the average funeral being $7,000 in California, it becomes an event that should probably be planned for. That total does not include items such as cemetery costs, headstones, flowers or space for a  meal following the actual funeral.

Why is Burial Insurance Important?

For many people, burial insurance just makes more sense than a larger insurance policy. The age range to qualify for burial insurance can fall anywhere from 45 – 85 depending on the state and the company.

For a more mature person, who is maybe retired, or on a fixed income, without the means to carry a large policy, burial insurance is perfect for an individual in those kinds of circumstances.

Even times when there is a full term insurance or a whole life policy is building a cash value, in place, there can be a need for burial insurance to take care of those needs that come above and beyond a need for the family to pay outstanding debts and commitments. Then a policy that is guaranteed to be paid, no matter what, becomes very important.

What is Burial Life Insurance

Burial insurance is a low face value whole life insurance policy, that is purchased for the express purpose of paying the cost of the funeral process. The face amount is usually $2,000 – $25,000, with some policies getting up to $50,000.

There is usually a unit cost per thousand dollars of benefit, that is translated into a monthly cost. In California, there is also Preneed Burial Insurance, or a Preneed Funeral Plan, which are a state-regulated final expense, or burial policies, which are held in trust until the insured dies and then the contract comes to end with the funeral arrangements, products and services are utilized by the beneficiary.

Should You Prepay Your Funeral?

This is an excellent question because there is a great deal of information out there on the pros and cons of prepaying a funeral, or burial. Over the years many states have regulated the prepaid funeral plans and formed careful legislation around the transaction that takes place when a person prepays their final expenses in California.

The Pros of California State Regulated Burial Plans

  • You may need something very different, or change your mind about the options you want for your burial. And those options may not be available in your plan.
  • The funeral home you have contracted with can go out of business, or even steal your money.
  • You are unable to adjust your plan, to move to a new plan or even update the old plan to meet modern standards and costs.
  • The plan does not include an option for covering increased costs in the future
  • The funeral home can use the funds however they choose, while you are held to payments
  • There may be no funds if the insured dies before the contract is complete.
  • There may be no provision for benefits if the insured dies out of the country, or in another state.
  • The funeral home may purchase a whole life policy to cover the costs of prepayment, and those higher costs are paid by the policyholder.
  • In most plans if you change your mind, your premiums are lost.

The Cons of California State Regulated Burial Plans

  • There is no medical exams or questions for this type of insurance
  • Takes the burden off your family or loved ones.
  • Arrangements are generally all complete before the event.
  • If you lock in the total amount of the plan, the funds will cover the increases in costs due to inflation.

What is Included in a Prepaid Burial Service in California?

Although it varies from time to time and plan to plan a preneed burial plan includes the following

  • Casket (up to a certain type)
  • Funeral Home viewing
  • Hearst travel to cemetery of your choice
  • Flowers
  • Grave or Cemetery Markers

How Much Does Prepaid Burial Service Cost in California?

The cost in general is lower than a term life or whole life policy, but it normally depends on what you asking the funeral home, trust, or insurance plan to pay for.

There is no guarantee that the funeral home you choose will even be operating when you die. The cost rises as you add features that will protect against eventualities like inflation, change of venue, restaurants or halls for after the event lunch or dinner.

In general, small payments of $15 – $30 a month over 10 years will result in a $7,000 – $10,000 plan depending on the options chosen.

California State Regulations for Preneed Funeral Plans

In California, the funeral home can not directly contract with a customer to prepay funeral expenses. There must be a trust instrument in place, so the customer is protected from most if not all types of fraud or embezzlement.

There are specific guidelines in California that must be followed for the execution of the trust:

  • The terms of the trust must be exact
  • The terms must be fully rendered as understandable by the client.
  • If the purchaser is on Public Assistance, then the provisions of the trust must not exceed the dollar amount mandated by the government agency regulating the purchase.
  • There are strict guidelines for Cemetery Associations and Funeral Homes, and exclusivity of both.

What are the regulations in California for Preneed Funeral Plans

  • The trust must be executed by a third party, which can be an insurance company policy but must not be a funeral home.
  • The funeral home that is chosen by the insured will be compensated upon the execution of the provisions of the trust and not before.
  • The funeral home can not issue a plan that is not duly recognized as a trust instrument where both sides of that instrument are represented to the fullest extent of the agreement.
  • In California, the provisions of a Preneed Funeral Plan must always be exact as to what is included in the plan and what is limited.

What are the tax implications of Preneed Funeral Plans in California

  • If the plan is to be a trust funded by an insurance policy than that money is received tax-free at the time of the insured’s death.
  • The funeral home must collect and pay local and state tax, as a service or retail provider at the time service or products are delivered.

Prepaid Burial vs Funeral Plan

In a burial type of plan, usually, there are goods and services than in a funeral type of plan.

Burial plans are usually insurance based, where the insurance death benefit is being paid directly to a licensed funeral home, of a cemetery association

In most instances, funeral plans cover more products and services than burial plans.

Both burial plans and funeral plans are low-value trusts, based on a single or multiple payment plan held in trust for the insured.

Best Preneed Burial Plans

If you are planning a funeral in advance, or need burial plans, it is a best practice to research the funeral home you would like to use and then seek out the advice of an expert.

Many funeral homes offer prepaid burial plans, and some insurance companies offer policies designed for preparing for the eventual demise of the insured. But many companies advise not to prepay but to preplan.

Many funeral homes allow someone to pre-plan

  • Choice of casket
  • Type of interment -burial or cremation
  • Flowers
  • Viewing room
  • Religious service

More often, these days, people are preplanning rather than pre-paying for their exit from this life. It is much easier to put aside the money in a CD or bank instrument and leave it there until needed.

Then there is no conflict about how much costs have increased, or what options are available, the needs are met at the time when necessary and at the going rates for that time.

The burden of loved ones is reduced and the funeral is paid for without any extra costs above and beyond what is associated with the event. This helps the surviving relatives and loved ones and allows for a planned eventuality.

Frequently Asked Questions Regarding Burial Insurance in California

What is a pre-need burial contract?

A burial contract in California is a regulated document that must be funded through a trust in the name of this person seeking the instrument (insured).

It can only be a trust in this state due to the fact that prepaying a burial can be confusing and vary so greatly that the surviving relatives and loved ones end up paying for a funeral, or even losing all the funds put into the burial contract.

What is a prepaid funeral contract?

A prepaid funeral contract in the state of California is a legal document between a consumer and a funeral home, outlining and pre-paying for the consumer’s demise.

These types of documents are heavily regulated in California. They must be a trust, to guard against such happenstance as a funeral home going out of business, or a product line is discontinued.

Is embalming required by law in California?

Embalming is not required by law in California, but the deceased must be refrigerated within 24 hours of death. This does allow for religious observance that requires the body be in its natural state at the time of death.

Can a body be buried on private property?

In California internment of bodies is regulated by the municipality that the property is located in. That being said, the state law is that bodies must be buried in cemeteries, or in a place that is allowed by the municipality of record.

How to Find the Best Burial and Preneed Burial Insurance

When it comes to finding burial insurance or any type of life insurance, there are a lot of options available. As a result, it can be difficult to find the best life insurance policy for you.

Take the confusion out of the equation, and speak with an expert.  Our independent life insurance agents represent dozens of the best life insurance companies on the market.

Give us a call today, or begin comparing burial insurance rates instantly using our online quoting engine.

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