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Have a pre-need burial policy? It may not cover all you were told it would

ALBERTVILLE, ALA. - A lot of north Alabama residents have purchased a pre-need policy to cover their funeral expenses. Of course, you do this with surviving family members in mind, so they won't have to bear the burden. WHNT News 19 has learned many policy holders of Marshall Memorial Gardens who thought all of their final expenses were covered are finding out they're not. There are literally thousands of those policies out there, and the problem is people are finding out at the worst of times they're still going to have to shell out a bunch of cash.

James Beam lost his wife to cancer just a few weeks ago. He and Linda had been together for 37 years. It's been tough.

“They just had to release her and turn her over to hospice, and we stayed here together, you know, for the latter part of her life. She died right where I’m sitting,” Beam explained from the living room of his Albertville home.

Years ago, in the early 1990's, James and Linda bought a pre-need policy to cover all of their final expenses. And they thought everything was taken care of, until James had to go make arrangements for Linda's funeral.

“She didn't sell it so she wasn't going to honor it. We was going to have to give her $1,020,” Beam explained.

What James and Linda could not have known was the former owners of the cemetery, the same company who sold them that policy, had gone out of business and left town. The cemetery went into receivership. The state finally found someone willing to take it over, but they've had their share of problems, also. The new owner says the cemeteries he has in north Alabama are not breaking even. So they've been charging customers extra to open and close the graves, even if that was covered in their pre-need policy.

“If anyone has purchased an opening and closing, then, according to law, it was still a cash advance, and on the back of most contracts it will tell that it's still, that it will be accessed to today's prices,” Charles Kent, President of Kent Care LLC explained during a telephone interview from yet another funeral home he operates in Marianna, Florida,

Kent says there are several items and services the Federal Trade Commission allows to charge beyond what the pre-need policy covers. The $1,020 Mr. Beam had to come up with is the difference between what he paid and what today's rates would be.

“I would advise anyone that's got a pre-need to go down there and check it out before they come to the time of need,” Beam advised.

While you'd think the owners would notify policy holders about the additional charges so they could plan ahead, the manager of Marshall Memorial Gardens, Dawn Shamblee, says it would cost thousands of dollars the company doesn’t have.

Meanwhile, families all over Marshall County are finding out their pre-need policies are not worth what they were advertised.

The owner of Marshall Memorial Gardens in Albertville told us they charge for certain services that they provide, even if the customer has a policy the says those services are already paid for. And they say it's perfectly legal.

“And we got down there and the lady said you owe us another $800. Well, we had a prepaid plan that covered everything and we'd had it probably 15 or 20 years,” said Bobbie Hayes. She told us dealing with Marshall Memorial Gardens after her husband's death earlier this year was one of the worst experiences of her life.

“She got up and she said, because we were questioning why I was going to have to pay that $800, she got up and said I couldn’t care less if he's buried or not, and walked out,” Hayes told us.

Like Mr. Beam, the Hayes also had a pre-need policy that was supposed to cover all funeral and burial expenses. The $800, which Marshall Memorial Gardens eventually accepted, was to pay the difference in what their policy paid and the actual cost of opening and closing the grave.

“One out of every two to three files are missing when a family comes in."

Charles Kent is no stranger to these controversies. We first met him three years ago when a Taking Action investigation revealed hundreds of pre-need contracts and files were missing from yet another funeral home and cemetery he owns, in Hampton Cove.

So we dug even deeper. We learned from court records Kent is being sued in Madison County by the family of another man who also had a pre-need policy. The lawsuit charges Kent's employees interrupted and stopped the man's visitation and funeral service when his family refused to pay the difference.

In Marshall County, we found yet another lawsuit even more disturbing. This one alleges Kent's employees buried a 20-year-old man just inches below the surface in Brookwood Cemetery, near Scant City. That’s another one of Kent's cemeteries. The boy's mother made the gruesome discovery as she was tending to his grave.

Regarding those pre-need policies, Kent tells us the FTC allows them to charge today's rate because they are referred to as cash advance services, typically provided by a third party. That includes opening and closing the grave. Typically, they will apply what the pre-need policy covers against the actual charge. So technically the policies are being honored but not in the manner in which they were sold.

We contacted the Alabama Insurance Commissioner's office and learned they have absolutely no jurisdiction over policies that were written before May 1, 2002.

So what's the best advice for anyone who has purchased a pre-need policy from any cemetery, not just Memorial Gardens? In the past 20 to 30 years a number of north Alabama cemeteries and funeral homes have changed owners, which could affect certain pre-need policies. If you have one of these policies, you would be wise to contact the funeral home and cemetery and find out exactly what is going to be covered.

If you’re considering buying a pre-need policy, insurance agents we spoke with recommend purchasing a small whole life policy instead. Your beneficiary would be able to use those funds to pay for your funeral and burial.