What happens to excess funds from insurance-funded preneed?

Excess funds from insurance-funded preneed plans are typically sent to the estate of the purchaser. This means that any amount of money that exceeds the actual cost of the funeral services provided will be disbursed to the purchaser’s estate rather than reverting to the funeral home or any other entity. This provision ensures that the financial benefits gained from the preneed insurance policy are returned to the individual or their beneficiaries, allowing for proper estate settlements.

This practice aligns with consumer protection principles, ensuring that individuals do not lose out on funds they intended to allocate for their funeral expenses. It emphasizes the importance of transparency and accountability in funeral service transactions, ultimately allowing families to manage their financial affairs in a way that reflects their desires.

In relation to the other options, if the funds reverted to the funeral home, it could create conflicts of interest and undermine the trust that consumers place in these arrangements. Holding the funds indefinitely by the insurer does not serve a clear purpose and would prevent beneficiaries from receiving funds they are entitled to. Sending the funds to local charities would not align with the wishes of the purchaser, who may have intended for their estate to benefit directly from any excess.