I personally think it is in the best interest of the purchaser for the funds paid to be held by an insurer that is part of the Texas guarantee fund. Such a fund helps protect purchasers in the event their “insurer” went out of business. The insurers that are part of the “fund” all pay to create a reserve to handle the claims of any “member companies” who go out of business. That rarely happens but having the fund helps provide peace-of-mind. Having your funds held by an insurer also gives you more options to use another “provider” if you so desire. For example: You purchase a plan in this area but move to Denver. You would simply call the insurer once you are settled in Denver and tell them of your move and of your desire to have a funeral provider in Denver become the “designated funeral home”. By simply signing a piece of paper the policy designation is changed, no money has to change hands, and you are protected. If the provider puts your funds in an “in-house trust” you would most likely be penalized by inflation if you ever “changed your mind” and wanted to use another provider. You might get your original sum back, but you would NOT get all of the “growth” that that sum generated over the years and thus the effects of inflation would have to be dealt with.
If you have questions regarding this article, please contact Glenn Addison directly at the links and email provided, but comments are welcome.