Irrevocable vs Revocable Pre-Need Contracts
Section 1: General Definitions & Key Differences (1-15)
1. A revocable pre-need contract is defined as:
A) A contract that cannot be changed or cancelled
B) A contract that the purchaser may cancel or modify before death ✅
C) A contract that only the funeral home may cancel
D) A contract that automatically terminates after one year
2. An irrevocable pre-need contract is defined as:
A) A contract that the purchaser may cancel at any time
B) A contract that cannot be cancelled or refunded except in limited
circumstances ✅
C) A contract with no funding
D) A contract that is not legally binding
3. The primary difference between revocable and irrevocable pre-need
contracts is:
A) The type of casket selected
B) The purchaser's right to cancel and receive a refund ✅
C) The funeral home's location
D) The color of the contract
4. Which type of pre-need contract generally offers the purchaser more
flexibility?
A) Revocable contract ✅
B) Irrevocable contract
C) Both offer equal flexibility
D) Neither offers flexibility
5. Which type of pre-need contract is typically more expensive upfront?
A) Revocable contract (due to higher risk for funeral home) – varies; often
revocable may have higher fees or different pricing structures ✅
B) Irrevocable contract
C) Both cost the same
D) Neither costs anything
6. A revocable pre-need contract is considered a countable asset for:
A) Medicaid eligibility (available to the purchaser) ✅
B) No purposes
, C) Only for bankruptcy
D) Only for tax purposes
7. An irrevocable pre-need contract is generally considered:
A) An excluded asset for Medicaid eligibility in most states (if properly structured)
✅
B) A countable asset
C) A liability
D) Income
8. Which type of contract is commonly used for Medicaid spend-down
planning?
A) Revocable contract
B) Irrevocable contract ✅
C) Both types
D) Neither type
9. Upon cancellation of a revocable contract, the purchaser is entitled to:
A) A full refund of all funds held in trust, minus permitted cancellation fees ✅
B) No refund
C) Only 10% of the funds
D) Refund only after 5 years
10. Upon cancellation of an irrevocable contract, the purchaser generally:
A) Is not entitled to a refund (except in limited circumstances like death or
relocation) ✅
B) Receives a full refund
C) Receives a 50% refund
D) Receives double the amount paid
11. Which contract type typically allows the purchaser to change the beneficiary
or service selections?
A) Revocable contract (generally yes) ✅
B) Irrevocable contract (generally no)
C) Both allow changes
D) Neither allows changes
12. The right to cancel a revocable contract without penalty is often subject to:
A) A "cooling-off period" (e.g., 3-30 days) and/or a permitted cancellation fee ✅
B) No restrictions at all
C) Cancellation only with funeral home approval
D) Automatic cancellation after one year
13. In an irrevocable contract, the purchaser generally:
A) Gives up the right to cancel and obtain a refund ✅
B) Retains unlimited cancellation rights
, C) May cancel only on holidays
D) May cancel by phone
14. Which contract type provides more protection to the funeral home that
funds are secure?
A) Revocable contract (less protection because purchaser may cancel)
B) Irrevocable contract (more protection) ✅
C) Both provide equal protection
D) Neither provides protection
15. The decision between revocable and irrevocable often depends on:
A) The purchaser's financial and estate planning goals (e.g., Medicaid) ✅
B) The funeral home's preference only
C) The weather
D) The deceased's favorite color
Section 2: Revocable Contracts – Detailed Features (16-30)
16. In a revocable pre-need contract, the purchaser may cancel:
A) At any time before the death of the beneficiary ✅
B) Only within 30 days of signing
C) Never
D) Only after 5 years
17. Upon cancellation of a revocable contract, the refund is typically:
A) The full amount held in trust, minus any permitted cancellation fees or
amounts already expended ✅
B) Zero
C) Double the amount paid
D) Only the interest earned
18. Many states permit the funeral home to retain a "cancellation fee" of:
A) A fixed dollar amount or percentage (e.g., 10% or $250) ✅
B) Unlimited amount
C) 50% of the contract
D) No fee is ever permitted
19. In a revocable contract, the purchaser may generally:
A) Change the selected goods and services ✅
B) Not make any changes
C) Only change the casket
D) Only change the date
Section 1: General Definitions & Key Differences (1-15)
1. A revocable pre-need contract is defined as:
A) A contract that cannot be changed or cancelled
B) A contract that the purchaser may cancel or modify before death ✅
C) A contract that only the funeral home may cancel
D) A contract that automatically terminates after one year
2. An irrevocable pre-need contract is defined as:
A) A contract that the purchaser may cancel at any time
B) A contract that cannot be cancelled or refunded except in limited
circumstances ✅
C) A contract with no funding
D) A contract that is not legally binding
3. The primary difference between revocable and irrevocable pre-need
contracts is:
A) The type of casket selected
B) The purchaser's right to cancel and receive a refund ✅
C) The funeral home's location
D) The color of the contract
4. Which type of pre-need contract generally offers the purchaser more
flexibility?
A) Revocable contract ✅
B) Irrevocable contract
C) Both offer equal flexibility
D) Neither offers flexibility
5. Which type of pre-need contract is typically more expensive upfront?
A) Revocable contract (due to higher risk for funeral home) – varies; often
revocable may have higher fees or different pricing structures ✅
B) Irrevocable contract
C) Both cost the same
D) Neither costs anything
6. A revocable pre-need contract is considered a countable asset for:
A) Medicaid eligibility (available to the purchaser) ✅
B) No purposes
, C) Only for bankruptcy
D) Only for tax purposes
7. An irrevocable pre-need contract is generally considered:
A) An excluded asset for Medicaid eligibility in most states (if properly structured)
✅
B) A countable asset
C) A liability
D) Income
8. Which type of contract is commonly used for Medicaid spend-down
planning?
A) Revocable contract
B) Irrevocable contract ✅
C) Both types
D) Neither type
9. Upon cancellation of a revocable contract, the purchaser is entitled to:
A) A full refund of all funds held in trust, minus permitted cancellation fees ✅
B) No refund
C) Only 10% of the funds
D) Refund only after 5 years
10. Upon cancellation of an irrevocable contract, the purchaser generally:
A) Is not entitled to a refund (except in limited circumstances like death or
relocation) ✅
B) Receives a full refund
C) Receives a 50% refund
D) Receives double the amount paid
11. Which contract type typically allows the purchaser to change the beneficiary
or service selections?
A) Revocable contract (generally yes) ✅
B) Irrevocable contract (generally no)
C) Both allow changes
D) Neither allows changes
12. The right to cancel a revocable contract without penalty is often subject to:
A) A "cooling-off period" (e.g., 3-30 days) and/or a permitted cancellation fee ✅
B) No restrictions at all
C) Cancellation only with funeral home approval
D) Automatic cancellation after one year
13. In an irrevocable contract, the purchaser generally:
A) Gives up the right to cancel and obtain a refund ✅
B) Retains unlimited cancellation rights
, C) May cancel only on holidays
D) May cancel by phone
14. Which contract type provides more protection to the funeral home that
funds are secure?
A) Revocable contract (less protection because purchaser may cancel)
B) Irrevocable contract (more protection) ✅
C) Both provide equal protection
D) Neither provides protection
15. The decision between revocable and irrevocable often depends on:
A) The purchaser's financial and estate planning goals (e.g., Medicaid) ✅
B) The funeral home's preference only
C) The weather
D) The deceased's favorite color
Section 2: Revocable Contracts – Detailed Features (16-30)
16. In a revocable pre-need contract, the purchaser may cancel:
A) At any time before the death of the beneficiary ✅
B) Only within 30 days of signing
C) Never
D) Only after 5 years
17. Upon cancellation of a revocable contract, the refund is typically:
A) The full amount held in trust, minus any permitted cancellation fees or
amounts already expended ✅
B) Zero
C) Double the amount paid
D) Only the interest earned
18. Many states permit the funeral home to retain a "cancellation fee" of:
A) A fixed dollar amount or percentage (e.g., 10% or $250) ✅
B) Unlimited amount
C) 50% of the contract
D) No fee is ever permitted
19. In a revocable contract, the purchaser may generally:
A) Change the selected goods and services ✅
B) Not make any changes
C) Only change the casket
D) Only change the date
