What is a preneed funeral contract?
“Preneed” is an arrangement where someone pays for a funeral in advance – sometimes several years before the actual funeral service. It can help relieve some of the emotional and financial pressures loved ones may feel at the time of their loss.
A preneed contract is an agreement between a customer and a funeral service provider. A customer agrees to specific payment terms, such as paying for the funeral in one installment or signing up for a payment plan. The customer may also have the option of signing a preneed funeral contract through an insurance company. The preneed contract locks in funeral costs.
What is a preneed funeral bond?
If a customer wishes to arrange a funeral and set aside finances ahead of time, they can work with a bonded funeral company. Many states require funeral service providers to post preneed funeral bonds to ensure they honor their contracts with customers.
Also called “prepaid funeral bonds,” these license and permit bonds guarantee that funeral service providers fulfill their obligations as promised – or pay the consequences if they don’t. If a funeral home or provider mismanages funds or breaches a contract, the surety bond will hold them liable.
Get Your Preneed Funeral Bond:
- “Preneed” is an arrangement where someone pays for a funeral in advance – sometimes several years before the actual funeral service.
- Many states require funeral service providers to post preneed funeral bonds to ensure they honor contracts with customers.
- Preneed funeral bonds are three-party contracts involving a principal (the funeral provider), an obligee (the state requiring the bond), and a surety (the bond issuer).
- The cost of your surety bond will depend on the state in which you live, your license regulations, your financial standing, and your credit score.
How does a preneed funeral bond work?
Preneed funeral bonds are three-party contracts involving a principal (the funeral provider), an obligee (the state requiring the bond), and a surety (the bond issuer). The bond ensures the principal fulfills the obligations outlined in the bond contract, as the state governing agency requires. If the funeral service provider fails to abide by the contract terms and costs another party money, the injured party may file a claim up to the total bond amount.
The surety will back the bond by acting as an intermediary between the principal and the injured party. If a customer files a claim against the bond, the surety will cover the costs upfront. The funeral home must later repay them in full.
How much does a preneed funeral bond cost?
The cost of your surety bond will depend on your state, license regulations, financial standing, and credit score. You will pay a small percentage of the total bond amount. For example, if your state requires a $40,000 bond and your rate is 3%, you’ll pay $1,200 as your annual premium.
If you live in California, Wyoming, North Dakota, Georgia, North Carolina, South Carolina, or Virginia, you may need to obtain a preneed funeral bond. Contact ZipBonds to know for sure.
How to Get a Preneed Funeral Surety Bond
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply today online or call us at 888.435.4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.