National Board Of Examination (NBE) Arts Practice Exam

Which type of funeral arrangement involves a prepayment for services to be conducted in the future?

1. Trust fund arrangement

2. Preneed funeral contract

3. Contingent funeral plan

4. Immediate funeral agreement

The correct answer is: Preneed funeral contract

The preneed funeral contract is a specific type of arrangement that allows individuals to prepay for their funeral services in advance. This arrangement assures that when the time comes, the services — which can include casket selection, burial plans, and other final arrangements — are already paid for and thus shielded from inflation or future price increases. It provides peace of mind to both the individual and their family, knowing that decisions have been made ahead of time. While other arrangements may involve financial planning for funerals, they do not specifically entail a prepaid contract for services lined up years in advance like the preneed funeral contract does. Trust fund arrangements often involve setting aside money in a fund, but they may not be specifically for the intent of securing funeral services. Contingent funeral plans are generally based on certain conditions that must be met before they take effect, not fixed prepaid services. Immediate funeral agreements deal with arrangements made at the time of death without prior planning or prepayment. This highlights why the preneed funeral contract is distinguished by its advance planning and financial commitment.