| Sargent & Lundy Savings Investment Plan |
| THE FINAL PAYMENT: ARE YOU PREPARED? |
| The following excerpts are from the
September 1997 issue of "Money" magazine. The
opinions of the author, Marlys Harris, may or may not
reflect those of the SIP Committee. After Eileen Justi's father, Ralph Goetz, died at age 77 last November, she and her brother told the director at Drake & Sons Funeral Home in Chicago they could spend no more than $5,000 on the funeral. The director then led them to a flimsy cloth-covered casket that "looked like an ironing board from K-Mart, only not as nice," Justi recalls. Dismayed, Justi and her brother ended up buying the $3,570 Westmont, an 18-gauge-steel casket. Drake also charged them a $1,395 "minimum professional service fee" simply for agreeing to handle the funeral, $470 for the use of a hearse to take the body on a 15-minute ride to the cemetery and $264 for placing an obituary in the newspaper. The entire affair cost $7,000. Outrageous? You bet. The Westmont casket wholesales for about $682 in many parts of the country, according to Henry Wasielewski, a Catholic priest and a director of the Interfaith Funeral Information Committee, a Phoenix group that publishes casket-cost data. A fair price would have been $1,360. The $470 hearse ride commonly costs $125 to $175, says Father Wasielewski. And if Justi had placed the obituary herself, it would have cost $80 rather than the $264 the funeral home charged her. A spokesman for Drake's parent company, ServiceCorp. International, admits that some of its upscale funeral homes do mark up prices. But Father Wasielewski scoffs. "In most of the country, you can hold a perfectly beautiful funeral with a metal casket for $1,700 to $2,200," he says. Unfortunately, few grieving families pay anything close to those prices. More than 30 years after Jessica Mitford's investigative classic "The American Way of Death" and 13 years after the Federal Trade Commission supposedly outlawed the worst abuses, the self-styled "death care" industry remains a hotbed of predatory pricing. Regulatory measures adopted in the 1980s were supposed to keep such galloping deathflation in check. Among other things, FTC rules require funeral homes to issue price lists, allowing consumers to comparison shop. But several recent developments have enabled the industry to outflank consumer protections: * Corporations are gobbling up local funeral homes. Over the past 15 years or so, three conglomerates have stealthily bought up hundreds of funeral homes, cemeteries and crematories from coast to coast. In many communities, the chains have all but eliminated competition. * Service charges have exploded. In 1994, the Federal Trade Commission allowed funeral homes to fatten the so-called nondeclinable charge. (This is what Drake called the minimum professional service fee.) The fee offers no particular benefit to customers and is levied on top of whatever markups the mortuary already charges on merchandise and specific services. The fee average $1,080 in 1995, up 42% from the previous five years, and can run as high as $3,000. * Prepaid funeral plans are failing to deliver on promises. So-called pre-needs arrangements, which you buy to pay for your own funeral before you die, often let funeral homes and cemetery operators off the hook when it's time for them to pay. Unfortunately, burying a loved one is an expense you can't avoid facing sooner or later. We'll tell you what you will be up against when that moment comes and how you can escape a gouging at the hands of the death-care merchants. FUNERALS R US Chances are that your friendly neighborhood funeral home is now owned by one of three conglomerates - ServiceCorp. International (SCI) of Houston, the Loewen Group of Burnaby, B.C. and Stewart Enterprises of Metairie, La. The chains have quietly bought 15% of the nation's 22,000 funeral homes as well as hundreds of crematories and cemeteries. In most cases, the acquirer makes no outward changes in the business; indeed, the corporate strategy is to capitalize on decades of good will built up by the prior owners. In theory, chain ownership should lower prices. That's because the consolidators typically pool staff, vehicles and embalming facilities, and get volume discounts on caskets and other merchandise. However, under pressure form corporate management, most newly acquired funeral home raise prices. What to do? * Be prepared to conduct your own price survey. If you have a relative whose health is failing, call three to five local funeral homes to request their price lists. Even in the same neighborhood, prices can very by as much as $3,000. * If a death occurs unexpectedly, delegate the price-shopping to a clear-eyed relative or friend. THE RIGHT FUNERAL STUFF Caskets make up nearly half the cost of the average funeral, according to the National Funeral Directors Association (NFDA). The cheapest are so-called alternative containers, usually cloth-covered wood or cardboard, selling for between $35 and $465. At the other extreme are those made of what funeral directors gushily call semi-precious metal - bronze and copper. Funeral directors, when showing caskets, will often invoke a famous dead person to add cachet. "If you look like a Republican, then this is the same casket Nixon had," says Ed Markin, author of "The Affordable Funeral: Going in Style, Not in Debt". "If you're a Democrat, Jackie Onassis was buried in it." A fancy casket serves no purpose, however, It cannot protect the deceased from the dust-to-dust process. What to do? * Consider ordering a casket yourself. Discounters such as Consumer Casket USA (800-611-8778) and Direct Casket (800-732-2753) sell their wares for 33% to 75% less than the typical funeral home and can ship anywhere in the continental U.S. within 24 hours. The FTC bars funeral directors from charging fees to handle outside caskets: however, they may try to discourage you by requiring someone from the family to be present when the casket arrives. * Consider budgeting less money for the casket and more for a grave marker. A casket goes underground or into a mausoleum, but the marker will be visible for years to come. THE GRAVEYARD'S STING Once you pick a grave site, you often find yourself committed - like it or not - to a pricey package deal. It's illegal for funeral homes to try that on you, but cemeteries are exempt from the FTC rules. For example, many cemeteries require all graves to have cement liners or vaults. (A vault is essentially a giant box to hold the casket. Simple cement vaults cost about $450, while elaborate marble ones can go for $18,000. A liner is a thinner cement box that costs about $250.) Neither structure can preserve a body. Cemeteries can also force grave owners to buy markers that fit in with the landscape design - and some of them can be quite expensive. What to do? * Try not to buy plots directly from the cemetery. Ken Lambert, president of Funeral Shoppers, a Houston company that helps consumers make low-cost arrangements, recommends that you check local newspapers for grave sites being sold by families who have moved, divorced or made other provision. * Before you buy, ask about the cost of interment, markers, vaults and other funeral goods. Cemeteries and funeral homes both sell vaults - so negotiate with both to get the lowest price. CREMATE WITH CAUTION In many cases, cremation is cheaper that burial. When consumerist crusader Jessica Mitford died last year, for example, her simple cremation cost only $562. However, as an increasing portion of the public choose cremation - about 21% of bereaved families in the nation overall - the funeral industry has countered by selling "memoralization." That means a viewing, which requires embalming; an attractive casket' a fancy urn to hold the ashes' and so on. There's even cremation jewelry - keepsake pendants that allow several family members to share and wear a relative's ashes. As a result, cremation may be anything but cheap. What to do? * Choose a so-called direct cremation, which covers only the removal of the body from the place of death, disposal, and official certificates. Just because the body disposal is simple doesn't mean that you cannot commemorate the life that has gone. You can do that anywhere - in a service at church or a private home. PAY NOW AND PAY LATER Funeral directors and cemetery owners have convinced about 17 million adults to prepay or to buy burial insurance to cover at least some portion of their final expenses. In many states, funeral directors must put 100% of this so-called pre-needs money in trust; cemeteries are subject to much looser regulations. The contracts and policies have tremendous drawbacks. For example, if customers move away, most states allow only partial refunds. Worse, few states check to see whether the funeral homes and cemeteries actually have the money in trust, says Karen Leonard, an industry expert who was the researcher on Mitford's "The American Way of Death". Indeed, pre-needs customers have lost big bucks in California, Illinois, Iowa and Pennsylvania in recent years. What to do? * Instead of paying a funeral director in advance, consider placing money in a Totten trust (also called "in trust for" or "pay upon death" account). Not really a trust, it's a special bank account payable at the time of death to whomever you designate. So, when you die, the beneficiary can easily withdraw the funds for funeral expenses. That's probably the best thing you can do for your kids - and yourself. |
This page updated on 10/27/97