Arkansas State Board of Embalmers and Funeral Directors Service Laws, Rules, and Regulations (LRR) Practice Exam

What is the term for a contract that involves the prepayment and sale of funeral services?

1. Funeral service agreement

2. Prepaid funeral benefits contract

3. Deferred payment plan

4. Funeral trust fund agreement

The correct answer is: Prepaid funeral benefits contract

The term for a contract that involves the prepayment and sale of funeral services is known as a prepaid funeral benefits contract. This type of agreement allows individuals to pay for their funeral services in advance, securing their wishes and alleviating financial burdens from family members at the time of death. This arrangement typically includes specific services, merchandise, and potentially locking in current prices for future services, which can protect individuals against inflation in funeral costs. By entering into a prepaid funeral benefits contract, consumers ensure that their preferences regarding services and products are honored as they predetermined during their lifetime. Other options, while related to funeral services, do not specifically refer to the prepayment aspect. A funeral service agreement generally outlines the details of services to be provided but does not necessarily include prepayment. A deferred payment plan typically involves a payment arrangement after services are rendered, rather than prepayment. Lastly, a funeral trust fund agreement deals with setting aside funds for funeral-related expenses but is distinguished from a direct prepaid benefits contract in its structure and intent.