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FINAL ARRANGEMENTS
By Vicki Duffy
Consumer Reports
May 2001

http://tinyurl.com/2v2ug

http://www.consumerreports.org

............

Our investigation shows that you'll probably pay top dollar for a prepaid
funeral. There are much better ways to plan in advance.

............

Even if you're only in your 50s -- and especially if you've helped arrange a
funeral or attended one lately -- three big funeral chains want you to think
seriously about dropping dead yourself. No, they don't wish you ill; they
just want to sell you a prepaid funeral for thousands of dollars. Cash up
front. Today, thank you.

An estimated 9 to 11 million Americans have already bought some $21 billion
worth of prepaid funerals. Now aggressive marketing has given this familiar
product new life. The pitch is simple: Plan ahead and save your family the
stress of making arrangements at the worst time; lock in your price now to
avoid much higher costs later.

But the notion of juggernaut price hikes is largely a myth, according to a
Consumer Reports investigation. Indeed, prepaid plans benefit struggling
funeral chains more than they protect your pocketbook.

The nation's three big funeral chains have used prepaid plans as part of a
growth strategy that included borrowing billions of dollars to buy funeral
homes from coast to coast. Those chains now own a quarter of the nation's
22,000 funeral homes, but they're in trouble. One of them, the Loewen Group
of Burnaby, B.C., is in bankruptcy, while the other two -- Houston-based
Service Corporation International (SCI) and Stewart Enterprises of Metairie,
La. -- were so desperate for cash last year, they took $84 million from
their Florida customers' prepaid funeral trust accounts to make debt
payments, replacing the money with surety bonds -- IOUs. The switch was
approved by the state Board of Funeral and Cemetery Services, an appointed
group that oversees Florida's funeral homes and whose chairman is employed
by Stewart. Perfectly legal under Florida law, such a deal would not be
allowed in most other states.

Now these companies expect to help bail themselves out of their problems by
stepping up sales of -- you guessed it -- prepaid funerals and burials.

While prepaid plans are worth avoiding, the funeral chains' troubles --
coupled with increasing demand for simpler, cheaper funerals -- are actually
giving consumers more power than ever to plan a dignified funeral at a
reasonable price. (See "How to Buy a Funeral" below.) The key is
preplanning, not prepaying.

Our examination, including a price survey of 235 funeral homes in seven
cities, discovered other news, both good and bad:

Affordable funerals.

Throughout the country, there are plenty of standard funerals -- with
viewing, ceremonies, and an attractive casket -- costing $2,500 to $4,500
excluding cemetery charges, our survey found. That's hundreds to thousands
of dollars less than the $5,000 average price cited by the National Funeral
Directors Association, an industry trade group. Half of the more basic
arrangements available in all metropolitan areas we surveyed ranged from
$500 to $1,700. But comparison shopping is a must. Our survey found wide
price variations, even within the same city.

Big chains often charge more. Overall, national funeral-home chains charged
roughly $1,300 more than independent homes for comparable funerals, our
survey found.

But our analysis uncovered another type of funeral home, whose prices were
lower still: small local chains of two to four homes. These small chains, on
average, offered funerals for $2,000 less than the big national chains.
Differences varied more by city, and ranged from $1,700 in San
Francisco/Oakland and Austin, Texas, to $3,000 in Orlando, Fla. Small chains
also had the best prices in those cities for the most basic, lowest-cost
arrangements, involving immediate cremation or burial.

Flawed federal rules.

Federal regulations require that funeral homes provide consumers with
itemized price lists -- an important consumer shopping tool (see "Your
Rights" below.). But prices don't have to reflect the actual cost of
providing those services. That limits a consumer's ability to accurately
gauge value. For example, a funeral home may feature a relatively low fee
for "professional services" but mark up the cost of a casket, a tangible
item whose value is more easily understood. Meanwhile, funeral directors can
and do negotiate discounts if you buy the casket from them, which also
undercuts the value of standardized price lists.

New come-ons.

Personalization is the latest buzzword that big funeral chains are banking
on to sell higher-priced merchandise and services -- specially engraved
casket lids, golfing doodads for the casket, and headrests embroidered with
your choice of poetry. Other new revenue-generators: estate planning, grief
counseling, and legal services. Consumers don't need to buy those services
from a funeral home; we recommend they shop for specialists in the wider
marketplace.

Saving money

Jessica Mitford was one of the first to prompt consumers to think about
funeral prices with her 1963 book, The American Way of Death, a witty rebuke
of "the most irrational and weirdest" status symbol. Industry critics
haven't had a kind word for funeral directors ever since. Nevertheless, in a
recent telephone survey of 1,002 adults conducted by the Wirthlin polling
organization for the Funeral and Memorial Information Council, 95 percent of
respondents said they thought attending a wake or funeral service is a good
way to express their feelings after a death.

But there are signs that Americans are increasingly opting for simpler and
less costly arrangements. In the same survey, 41 percent of respondents said
they would prefer something other than a full-scale funeral for themselves.
"In the mid-1980s, families wanted elaborate burials, bronze and copper
caskets, and multiple limousines," says Robert Falcon, president of All
Faiths Funeral Service in Austin, Texas, which had the lowest funeral prices
in that city, our survey found. "Now they're declining the limousine.
They're forgoing visitation for something very basic at the grave site.
People's tastes have changed."

About one-quarter of the 2.4 million Americans who die each year are
cremated rather than buried -- a percentage that continues to rise.
Cremation puts pressure on mortuaries to keep funeral prices in check,
because consumers who opt for cremation typically eliminate the funeral
service, and the vast majority buy less expensive alternative containers
rather than a pricey casket.

Funeral homes are also beginning to feel pressure from discount casket
sellers who opened shop in 1996, after the Federal Trade Commission required
funeral homes to accept caskets from outside providers and prohibited them
from charging exorbitant handling fees.

For example, Baldwin-Fairchild Cemeteries and Funeral Homes in Orlando, part
of the Stewart chain, charges $3,950 for the Primrose 18-gauge steel casket,
Batesville Casket's best-selling model. Direct Casket, which has six
showrooms in Los Angeles and New York City and sells everywhere else in the
U.S. via www.directcasket.com, sells the same casket for $2,095 delivered
the next day -- a $1,855 saving. The wholesale cost: $948.

One funeral director we surveyed says he stocks almost no caskets now. "That
was the old way. The industry is changing. I ask customers to go on the
Internet to get their casket," says Milton Tellington of Tri-State Funeral
Service in Washington, D.C.

High-priced funeral homes and chains are also facing competition from other,
low-priced homes. New ComerCannon Family Funeral Home in Albany, N.Y., is
doing what was once unthinkable in this collegial business; it gives
prospective customers a chart showing how its prices compare with named
competitors in town. Our survey found New Comer-Cannon's $3,380 price for a
standard funeral with an 18-gauge steel casket was more than $1,600 lower
than the median price for that type of funeral in Albany.

All this competition has significantly slowed funeral-price inflation, which
was at 5 to 6 percent in 1990 through 1997 but just 2.8 percent last year.

The large debt-heavy chains don't see price cuts as the answer to
competition. "They have leeway to lower prices, but no one is talking about
lowering prices. They're trying to get more revenues by adding services,"
says Fran Blechman Bernstein, a first vice president and research analyst at
Merrill Lynch in New York City.

The Stewart chain sees increased revenues and profit margins, and "enhanced
pricing opportunities" in the growing demand for more personalized,
customized funerals, says Brian Marlowe, Stewart's chief operating officer.
"Baby boomers," he adds, "are more focused on doing things their way." But
independents such as John Cannon of the New Comer-Cannon home, say
personalized service should not cost more. Last year, his home handled the
cremation of a Harley-Davidson aficionado and created a room with the man's
bike and memorabilia. "I don't charge extra for that. You can't just make up
charges, such as a facility setup fee, if it's not on your General Price
List," says Cannon.

SCI, which owns 3,755 funeral homes, has begun using the relationship it
establishes with customers as a foot in the door for selling after-funeral
services, including estate planning, legal advice, and grief counseling. The
company is also working on "massive relationship-building" with various
organized groups to attract large blocs of new customers, says SCI President
Jerry Pullins.

"Make no mistake about it, the primary beneficiary of these relationships
will be SCI homes," Pullins says. "With this we're talking to hundreds or
thousands of people instead of dozens per day."

Prepaid funerals are also a big part of the sales push by chains. If you
were born before 1951, expect your solicitation call soon.

The trouble with prepaid funerals

Paying today for the promise of services and merchandise delivered years
from now is always an iffy proposition for the buyer. In 1997, when Arlene
Duffy Hilley, of Harvey, La., went to collect the $1,500 funeral that her
mother, Vicki Duffy, had bought in 1969, she expected arrangements befitting
the large-funeral tradition of their Italian-American family. Instead, "The
funeral home wanted to put her in a cardboard box!" says Hilley. Hilley
wanted a steel casket, and ended up paying $3,500, which she charged to her
credit card.

Loewen officials counter that Duffy's policy paid for services and a
cloth-covered casket. "Granted, the casket may not be the prettiest thing,
but it wasn't a Dracula box and it wasn't cardboard," says Billy Henry,
general manager of Loewen in New Orleans.

Prepaid funerals, sold as burial insurance, have been around since the
1940s. From the late 1950s through the 1960s, millions of small-value burial
insurance policies, known as industrial life, were sold throughout the south
-- policies that often charged premiums totaling more than the benefit
received. Worse, African-Americans were typically charged race-based
premiums 7 to 33 percent higher than those charged to whites. After
discovering that some African-Americans were still paying race-based
premiums on old policies, Florida and Georgia officials issued
cease-and-desist orders last year to 28 insurers.

But prepaid funerals did not become a booming business until the 1980s, when
the Loewen, SCI, and Stewart companies all saw that the product could lock
up and gain market share.

So prized is this product that funeral chains offer "bonus trips, banquets,
Million Dollar Club awards, and other sales awards," says one SCI want ad
for "counselors."

Most buyers of these plans today are in their late 60s, according to
industry officials. But the new targets are people age 50 or older, the
leading edge of the huge, monied baby-boom population bubble.

Prepaid plans usually require that you advance-pay your own benefit -- the
full price of the funeral. Most or all of your money goes into a trust
account or an insurance policy where the seller collects a commission of
roughly 15 percent. The price of your future funeral may or may not be
guaranteed, depending on the terms of the contract.

A study by Consumers Union in October 2000 exposed major financial drawbacks
in prepaid plans sold in Texas. Among the problems: Once a plan is written,
changes, such as upgrading a casket, can void any price guarantees. If a
plan is cancelled, the consumer gets back only 50 to 90 percent of the
principal and none of the accrued interest. And some consumers pay more in
insurance premiums than they receive in benefits; although interest earned
by the plan belongs to the funeral home, the beneficiary must pay the taxes.

Cindi Strauss, of New York City, says she is angry about the hidden fees she
discovered in the plan she bought for her mother. Strauss, an assistant in a
brokerage firm, says she wanted to be sure everything was taken care of for
her aging mother, Evangelina Addicks, back home in San Antonio, Texas. So in
1993 she bought a prepaid guaranteed-price funeral, including a $6,800
bronze casket, for $9,122. She figured she was covered -- and indeed, she
probably overpaid, based on our survey results. But when Addicks died in
1999, Strauss says she had to pay $656 more for obituaries and music, among
other things. Meanwhile, the funeral home had already collected $3,000 in
interest earnings on Strauss's plan over the years.

SCI officials say the extra charges were for services not part of the
contract. But they concede the contract omitted such basics as the cost of
the funeral service, a hearse, and use of the facilities for a viewing.

Portability can be another big problem. Charles and Suné Schwartz paid
$8,000 for their funerals and burial plots in Florida when they moved there
in 1990. But when they became ill, their son Perry brought them back home to
Georgia and tried to transfer the arrangements. Perry Schwartz, president of
a data-security firm, says the funeral home, part of the Loewen chain, would
accept a transfer only to another Loewen facility 50 miles from his home. In
the end, the family made all new arrangements. Loewen officials say they
offered a burial plot exchange and a partial refund but the Schwartzes
didn't accept it. Perry Schwartz disagrees. "We hired an elder-law attorney
and even he couldn't get the money back," Schwartz says.

Some states, such as New Jersey and New York, have consumer-friendly prepaid
funeral laws. But even when plans deliver without a hitch, as many do, they
don't save you anything. There's no discount for buying years in advance.
According to an internal industry survey of 3,156 funeral directors, 59
percent said prepayers spend about as much as anyone else who buys a
funeral; 22 percent said prepayers spend slightly more, and 4 percent said
they pay significantly more. Our survey showed that national funeral chains,
the biggest promoters of prepaid funerals, charge the highest prices.

Further, the interest the funeral home makes on your money is the main
guarantor of any price caps. In 1999, when the funeral price inflation index
rose only 3.5 percent, SCI's $1.5 billion prepaid funeral trust portfolio
earned 17.6 percent -- for the company, not consumers.

Finally, prepaid plans are unnecessary. You can accomplish the same thing
with a bank CD and some simple paperwork to liquidate the assets upon death.

Recommendations

The Federal Trade Commission is considering revisions to the Funeral Rule,
which gives consumers price and disclosure rights. FTC staffers have
indicated that they will recommend extending current requirements to
discount casket brokers, monument sellers, and cemeteries. They'll also
recommend requiring standardized disclosure of the terms of prepaid funeral
contracts. (The FTC has no jurisdiction over the terms themselves.)

Consumers Union supports these proposals and recommends one more: truth in
itemization. The Funeral Rule requires that 16 services be itemized, but it
doesn't require that the price of any one item bear any relationship to its
actual cost. Funeral homes thus calculate their operating costs and simply
spread the costs around the list. This makes it hard for consumers to judge
true value or make meaningful, itemized cost comparisons without toting up
an entire package of costs.

It seems unlikely that Congress will regulate prepaid plans. We strongly
advise consumers to stay away from these plans altogether. But we also
advocate state consumer-protection reforms that would require nothing less
than 100 percent of consumers' funds be put in trust, give consumers the
right to a full refund of principal and interest if they cancel, and protect
prepayers from losses when they transfer from one funeral home to another.
Until that happens, consumers will continue to be victimized by this poor
deal.

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HOW TO BUY A FUNERAL:
http://tinyurl.com/293le

With so many quick decisions to be made at the worst time, how can consumers
protect themselves?

Make sure your loved ones discuss their wishes with you (see "Necessary
Details" below).

Call on your faith. If you plan to have a religious service, contact your
pastor, rabbi, or other religious leader before you talk to a funeral
director. Much of what you'd pay a funeral home for a viewing or funeral
service can take place at your house of worship at no cost, although some
contribution is often customary. "Even if you haven't hooked up with a
congregation, you can still call a pastor. Three-quarters of the funerals I
do are for people who are not church members," says Rev. Sandy Peirce of the
Eldorado County Federated Church in Placerville, Calif., who has taken part
in funeral services for 20 years.

Call several funeral homes for prices, using the benchmark price list
(below) as a guide. Ask if the home is independent, part of a local chain,
or part of a national chain. (Often, the only way you'll know is to ask.)
Our price survey found that local chains generally offered the best value.

Visit prospective funeral homes and assess the staff and the size, location,
and ambience of the facilities. Sometimes a lower price comes with a smaller
facility and fewer amenities. When you're ready to make arrangements, bring
a clergy member or savvy friend.

Consider contacting nonprofit funeral consumer groups -- co-ops that offer
advice, and negotiate member discounts with certain funeral homes. The
Funeral Consumers Alliance (800 765-0107; <http://www.funerals.org>), is one
place to start.

Advance planning also means knowing the key elements of a funeral and what
they cost. The prices listed below are the ranges we found when we surveyed
235 funeral homes in seven cities. A standard funeral typically includes
these items:

Casket ($200 to $5,700 for 20-gauge steel; $3,000 to $36,000 for bronze). A
funeral home's range of casket prices serves a purpose greater than consumer
choice. Funeral directors use the price list as a tool to figure out the
price range you're comfortable with, says Ronald Smith, professor emeritus
of economics at New York's Hunter College and author of The Death Care
Industries in the United States.

Other services -- everything from the embalming charge to the professional
fee -- cost the same no matter how big and expensive the funeral. "It is the
price of the casket and burial vault that ultimately determine the total
price of the funeral," says Smith.

The funeral director gauges where your preferences fall on the casket price
list. Mahogany or metal? At what price do you balk? To restore a balance of
power in this negotiation, decide what you want to pay before the funeral
director gets a chance to influence your decision.

There are several ways to save on a casket. If the body is headed for
cremation rather than ground burial, many homes offer rental caskets. You
rent the attractive exterior and purchase an inexpensive combustible inner
liner that houses the body for cremation. Prices for rentals ranged from $50
to $2,790. You can also buy the casket from a discount seller. The
government requires funeral homes to accept a casket from an outside
provider, if that's what the consumer wants; savings of hundreds to
thousands of dollars are possible. Alternative containers are also
available, but they're not always a bargain. We found cardboard caskets
ranging in price from $0 to $799; fiberboard, particle board, or hardwood
alternatives from $35 to $2,270; and cloth-covered from $110 to $2,036.

The professional fee ($355 to $1,995). This covers the services the funeral
director performs orchestrating the affair from start to finish, including
charges for staff and overhead. No matter what type of plans you make,
you're required to pay a professional fee. The wide variation seems
attributable to the increasing popularity of low-cost funeral homes.

Transfer of body to funeral home ($0 to $400). The body is picked up from
anywhere at any time of the day or night.

Embalming ($0 to $750). A body does not have to be embalmed, especially, for
example, if it will be immediately cremated or buried. State laws are more
likely to require embalming or refrigeration if burial or cremation occurs
more than 24 to 72 hours after death.

Dressing, cosmetology, and other preparation ($0 to $400). This service
involves making the body presentable for viewing and placement in the
casket.

Use of facilities and staff for viewing ($0 to $825). You pay for renting a
viewing parlor and for the use of the parking lot and other areas of the
funeral home to host visitors who wish to view the body and offer
condolences to the family. This charge can be eliminated by having the
viewing at your place of worship.

Use of facilities and staff for funeral service ($0 to $775). The funeral
service, if it's held in one of the home's chapels, usually takes place the
morning after the viewing, so this amounts to a rental fee for further use
of the facilities and staff. (One funeral home we surveyed says it's free if
there's also a viewing.) You can reduce this cost by holding the funeral at
some other location, such as a church or synagogue, or by having a memorial
service (without the body present) at a different place and time after
burial. Another alternative: Graveside services were sometimes less
expensive.

Rental of hearse with driver ($125 to $400). You need this special vehicle,
sometimes called a funeral coach, to transport the casket from the funeral
home or place of worship to the cemetery.

Rental of flower car with driver ($50 to $200). In the funeral motorcade,
this vehicle transports the flowers to the grave site. But there's often
room in the hearse for flowers.

Alternative arrangements ($765 to $3,920). Less common arrangements include
immediate cremation or immediate burial, neither of which involves a public
viewing, funeral service, or showy casket. In our survey, the median price
for immediate cremation (including the crematory fee) was $1,295; for
immediate burial, $1,740.

Other expenses. The cost of the funeral does not include additional charges
that are sometimes necessary, such as a burial plot for a casket, space in a
columbarium for an urn, or mailing of cremated remains. Some cemeteries
require the purchase of a grave liner or burial vault, which keeps the grave
from sinking as the casket disintegrates over many years. The least
expensive liners we found were made of concrete and cost $295; some cost as
much as $1,095 for concrete, and thousands more for bronze, marble, or other
pricey materials. There may also be incidental costs for a death
certificate, burial license, and filing fees. Experts say that many
consumers pay by check or credit card. Some funeral homes allow payment over
30 days.

A national view

Reasonably priced funerals are available, but prices vary greatly -- so
comparison shopping can pay off. Shown below are the range of prices in each
city we surveyed for a standard funeral with a median-priced, 20-gauge steel
casket.

http://tinyurl.com/293le

Benchmark funeral prices

What can you expect to pay for a funeral? In our survey, these are the
median prices charged by small local chains. We found that local chains
offered the best value. Prices assume that the funeral home provides the
casket.

Price Description:

$1,110 - Immediate cremation with minimum casket/container

1,384 - Immediate burial with minimum casket/container

3,099 - Standard funeral with alternative casket/container

4,067 - Standard funeral with 20-gauge steel casket

4,670 - Standard funeral with solid wood casket (excluding
mahogany/walnut/cherry)

4,845 - Standard funeral with 18-gauge steel casket

6,125 - Standard funeral with stainless steel casket

6,997 - Standard funeral with mahogany/walnut/cherry casket

7,100 - Standard funeral with bronze/copper casket

------------

YOUR RIGHTS:
http://tinyurl.com/2uwqn

The federal Funeral Rule gives consumers important rights:

Funeral providers must disclose prices of all services and merchandise to
callers who phone during business hours. If you make a request in person,
you must be given copies of the General Price List (which includes 16
standard items), the Casket List, and the Outer Burial Container List. In
our price survey, most funeral homes complied with the rule when we
telephoned, although some said they didn't know what was required and three
simply refused; we obtained prices anyway by visiting in person.

The General Price List must disclose certain information, including the cost
of immediate cremation and burial. You can limit your purchases to only
those items you want or that are required by state law. But you can't
decline the "professional services" fee.

If embalming isn't required by state law, it's illegal to charge for the
service without prior consent. And embalming often is not required or
necessary for immediate burial or cremation or for a closed-casket service.

A funeral provider must accept a casket you buy from somewhere else, and it
can't charge you a handling fee or other surcharge.

Funeral homes and crematories can't require a casket for immediate
cremations, but they can require inexpensive, alternative containers. They
must inform consumers about such containers.

If the funeral provider collects cash advances from you to pay someone else
for a service, such as cremation, it must tell you if it has marked up the
price above cost.

To report complaints, call the FTC toll-free at (877) 382-4357 or use the
Internet complaint form at:

http://www.ftc.gov

------------

NECESSARY DETAILS:
http://tinyurl.com/yv5zq

If there's one piece of advice our readers have for others who may have to
plan a funeral, it's this: Learn in advance the wishes of your loved one.
Some people, such as 71-year-old Hugh B. Mulvaney Jr., of Flemington, N.J.,
make this topic easier by preparing a letter of instruction. "Don't leave
your survivors in the lurch," advises Mulvaney, whose own "survivor
assistance checklist" is ten pages. Make sure the letter is left where
survivors can quickly get to it--not, say, hidden in a safe-deposit box.
Generally, survivors are not legally bound by a decedent's wishes, although
many want to take those wishes into account. Use the following as a guide.

BASIC ARRANGEMENTS:

- For burial: cemetery plot or mausoleum entombment, and where.

- For cremation: urn burial, urn in niche, or scattering of remains.

- For donation of body or organs: recipient medical school or hospital;
include necessary forms.

FUNERAL SERVICE:

- Funeral service with body present, or memorial service without the body.

- For standard funeral service: type and price range of casket; casket to be
open or closed.

- Place to be held: church, synagogue, funeral home, or elsewhere.

- Details of service: person to conduct, speaker, music, flowers.

- Charity to receive memorial donations, if any.

PERSONAL INFORMATION:

- Full name, home address (include county), home phone number.

- Address and phone number of place of employment, if any.

- Date and place of birth; citizenship.

- Marital status with full name of spouse, if any.

- Names and addresses of children, if any.

- Service in armed forces (dates, rank, andserial number), if any.

- For possible inclusion in an obituary, other biographical information such
as major employers, honors received, or memberships in professional
organizations.

OTHER INFORMATION:

- List of people to be notified when death occurs (with addresses and phone
numbers).

- Location of will and name of executor(s).

- List of assets and death benefits due.

- Location and number of safe-deposit box and key; names of others with
access to the box.

------------

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