DEAR SUN SPOTS: Here is a different question for you. It’s about a prepaid funeral. Mine is all paid for, and I’ve felt secure.

However, I’ve been told that it’s not refundable and if that funeral home goes out of business for some reason, you’re out of all that money and there’s nothing you can do about it. Is that true?

When I heard that, I wanted to withdraw my money and get life insurance to cover my funeral.

I was then told I had signed a paper saying it was nonrefundable. I can’t remember if I did or not. Is that even legal?

I’m talking with friends and all of them say they never heard of such a thing. Thank you. — No Name, No Town

ANSWER: To help No Name with her concerns, Sun Spots contacted the funeral home in question, the owner of which then called No Name to address her concerns. 

Sun Spots followed up with No Name, who said her questions had been answered satisfactorily, and all is well.

Meanwhile, to learn more about prepaid funerals so she could inform readers, Sun Spots called the Maine Funeral Directors Association, where she was directed to the codes in Maine law regulating prepaid funerals.

At Maine.gov (http://tinyurl.com/onla8rf), Sun Spots learned that funds for a prepaid funeral are placed in trusts, which guarantees that your money is safe even if the funeral home goes out of business.

Those trusts can be invested in a limited number of ways, some of which include federally insured bank accounts or municipal bonds, as agreed upon by the involved parties.

As for getting your money refunded, there are two types of mortuary trust agreements, revocable or irrevocable. On the website it says:

“A revocable agreement may be terminated by the payor at any time, in which case the funeral home shall refund the entire mortuary trust to the payor, less any fee permitted by paragraph 21 and any taxes paid pursuant to paragraph 22. The refund must be made within 30 days after receipt of written notice of revocation from the payor.

“An irrevocable agreement may not be terminated by the payor. However, the payor retains the right to transfer the mortuary trust to a different funeral home at any time by requesting the resignation of the trustee pursuant to paragraph 17 and appointing a successor trustee pursuant to paragraph 18.”

So even if you have an irrevocable trust, you do have options as to which funeral home.

The paperwork for these trusts is very clear and easy to understand. If you don’t understand even a small part of it, you should ask for help.

As for buying life insurance instead, many people think of life insurance as a very simple product: You pay a premium until you die, then the insurance company pays the beneficiary.

But in the world of increasingly complicated financial instruments, life insurance can be as much about investing as protecting your family against your untimely death. Please make sure you understand what you are signing up for.

Some insurance and investment salespeople also offer services as investment counselors. They may be very well informed, but they make their money by selling you products rather than by looking out for your best interests.

A true investment counselor is a “fiduciary,” a person with a legal responsibility to look out for your financial good health. Yes, they charge for their services (an hourly fee, much like a lawyer), but that way you know what you are paying for — good advice, not a product that may not really suit your needs.

There will be more on insurance in a future column, as Sun Spots has been asked to address the difference between whole and term life insurance.

This column is for you, our readers. It is for your questions and comments. There are only two rules: You must write to the column and sign your name (we won’t use it if you ask us not to). Please include your phone number. Letters will not be returned or answered by mail, and telephone calls will not be accepted. Your letters will appear as quickly as space allows. Address them to Sun Spots, P.O. Box 4400, Lewiston, ME 04243-4400. Inquiries can also be emailed to sunspots@sunjournal.com.

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