Final arrangements.(prepaid funerals)(Buyers Guide)(Industry Overview)

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," page 30.) 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: