What type of contract relates to funeral services where only the amount prepaid will be credited at the time of death?

The appropriate choice in this context is the non-guaranteed contract. This type of contract for funeral services operates on the principle that the amount prepaid will only be credited towards the services at the time of death, but it does not guarantee the cost of those services at that future date. In essence, it allows the funds to accumulate, but the family may be responsible for additional costs if the prices of services rise over time.

The non-guaranteed nature means that while consumers can prepay for their services, they are not protected from potential increases in service costs. This can lead to a situation where the prepaid amount is not sufficient to cover the actual expenses incurred at the time of need.

By contrast, a guaranteed contract would ensure that the prepaid amount covers all future costs regardless of price increases. A pre-need contract typically refers to arrangements made in advance for funeral services, which could be either guaranteed or non-guaranteed. A payment plan contract, on the other hand, usually involves a structured payment method rather than a prepayment plan that ties directly to future services.

Thus, understanding the non-guaranteed contract highlights the importance of budgeting for potential price inflation in funeral services.