How to sign up for Safe Money in the event of a funeral home closure

mr. A. paid his funeral dues faithfully for 10 years. he paid 3.6 million won, but when the funeral company he signed up with went out of business, he only got half of the money back, 1.8 million won. The answer was that there was no legal problem, and he had no place to vent his frustration.

this could happen to you, too. there are 8.92 million subscribers in Korea, or one in six people. however, from 2013 to 2019, a whopping 183 funeral companies were deregistered or canceled, affecting 530,000 people. in the last three years alone, unreturned compensation payments amounted to 30 billion won.

what's even more alarming is that 42 out of 75 registered funeral companies, or 56%, are underwater as of 2023. six out of 10 won't even be able to refund the full amount when they go out of business. today, we're going to show you how to get 100% of your money back and what you need to do before joining a safe funeral home, with real-life examples.

table of contents

• how many funeral homes go out of business and how consumers are affected
• why you're only guaranteed half the amount by law
• how to get 100% of your money back with MyFuneralGuest
• 5 checklists to ensure you're signing up safely
• the $100-a-month funeral service is a new option
• frequently Asked Questions
• conclusion

how many funeral companies are closing and how consumers are being harmed

in March 2019, 15 funeral companies that failed to meet the capital increase standard were scheduled to be deregistered at once. 7,800 subscribers were affected, and the amount of advance payment amounted to 5.33 billion won. the list included Hidden Korea, Daesangjo, Honor Life, and Yes Life.

the problem doesn't end there: since 2021, more companies have gone out of business than registered new ones. in 2023, DOD Mall Life went out of business, and in 2024, Shinwon Life went out of business. The total number of business closures reached 986,000 in 2023, the largest number since 2006.

the actual cases of damage are even more serious: people who paid in full until the maturity date but only got 50% of their money back because the company went out of business, people who didn't receive compensation because the funeral company didn't even report the payment to the compensation agency, and people who didn't receive compensation because they changed their address and contact information and didn't notify the company.

another thing to watch out for is illegal impersonators. in one case, a company falsely claimed to be a participant and demanded an additional 1.98 million won. your personal information may be compromised during the refund process, exposing you to these criminals.

why only half the amount is guaranteed by law

according to Article 27 of the Law on Installment Transactions, funeral companies are required to retain 50% of the deposit. the methods of compensation are bank deposits or membership in a mutual association. the problem is that the other 50% is not legally protected.

the size of the funeral deposits is even more shocking: out of 5.8 trillion won in total subscriber contributions, only 912.4 billion won is actually deposited. this is far below the legal deposit amount of 2.5 trillion won. of the 52 funeral companies that have been deregistered since 2010, 24 of them, or 46%, did not comply with the deposit requirement.

this is where the funeral deposit issue comes in. funeral directors are not financial firms, so they are not required to disclose their asset management, and they are not required to make provisions. 43 out of 70 firms, or 61.4%, have a liquidation assumption return rate of less than 100%. this means that they are not fully reimbursed when they go out of business.

to compensate for this, the government raised the minimum capital requirement from 300 million won to 1.5 billion won in 2015. although this has been in effect since January 2019, many funeral homes are still in poor financial condition.

get 100% of your money back with Inheritance Services

fortunately, there is a way to remedy the damage to funeral consumers. launched by the KFTC in April 2018, the service allows victims of a funeral home that has gone out of business to continue their funeral services with a participating company at no additional cost.

the biggest advantage is that 100% of existing payments are recognized. you only need to pay 50% of the compensation you received from the deposit protection organization to the new funeral home, and it will be recognized as the full amount of your previous contract. the other 50% is paid by the new provider.

currently, 14 blue-chip companies are participating in the service. they are: Kyungwon Life, Kyungwon Life, Jindae Life On, Daemyung Station, Deribon, The People Life, Boram Funeral Home, Parental Love Life, JK Funeral Home, Free Life, Halla Funeral Home, Hyundai S Life, Hyowon Funeral Home, and Human Life.

the process is simple. first, you need to apply for compensation from an advance payment organization. after submitting your ID and consumer protection certificate, you will receive 50% of the compensation. Then, you can choose any of the 14 participating companies, apply for membership, and submit proof of compensation. in the event of a funeral, you'll still be able to receive normal funeral services.

you can check the status of the funeral home you've signed up with on the Find a Funeral Home website, as well as information about the organization. it's important to check and respond immediately if a provider has gone out of business.

5 checklists for safe funeral arrangements

there are certain things you should do before signing up for a funeral. by checking them off, you can prevent most harm.

first, make sure the funeral company is registered. you can check if a prepaid installment business is registered on the Find a Funeral Director site. If it's not registered, it's an illegal business.

second, check their financial health. you should check whether the capital is more than KRW 1.5 billion, whether the audit report has an appropriate opinion, whether the liquidation assumption return rate is more than 100%, and whether the company is not in a state of capital erosion. In particular, the liquidation assumption return rate is a key indicator of whether you can be fully refunded in the event of closure.

third, check the deposit guarantee status, whether it complies with the statutory deposit guarantee ratio of 50%, and whether the guarantee organization is a bank or a mutual fund. you can get more information by contacting the Funeral Guarantee and Mutual Aid Association or the Korea Funeral Mutual Aid Association.

fourth, carefully review the terms of the contract. you should check the criteria for refunding the payment in the event of termination, the area and content of the service, additional charges, and the quality of funeral goods such as caskets and shrouds. Be wary of companies that heavily promote freebies.

fifth, follow up regularly after signing up. check the status of your deposit at least once a year, and be sure to notify the company of any changes in your address or contact information. Keep your contract, product description, and damage certificate safe, and let your family know you've signed up.

100-a-month funerals mean new options

in June 2024, a revolutionary change in the funeral industry began. the Goi Funeral Institute launched a 100-won funeral service. it attracted attention by attracting a total of 2.5 billion won in investment from Kakao Ventures, Credit Guarantee Fund, and others.

the biggest feature is that the monthly payment is only 100 won. this is a breakthrough compared to the average monthly payment of 30,000 won for traditional funeral services. when a funeral occurs, the remaining amount is paid at that time. there is also an option to prepay 9,900 won per month, which is similar to traditional prepaid funeral services.

the more important difference is that 100% of the payment is deposited with the Kookmin Bank. While traditional funeral services are only legally required to deposit 50%, 100won funeral services deposit the full amount. you get 100% of your money back even if you cancel early, and there are no recruitment fees or administrative deductions.

you're also guaranteed the price you paid when you signed up for a lifetime. even if prices go up, you'll still get the service you were promised when you signed up. the average cost of a traditional funeral service is 5 million won, while Goi's service is 2.5 million won, a 50% savings.

this low price is made possible by our digital transformation: we have data from funeral homes and cemeteries across the country, provide standardized pricing, and offer a one-stop shop for funeral services, funeral homes, and cemeteries. testimonials from real users tell us that the service was responsive on the day of the funeral, there were no extra fees, and the funeral director was friendly.

frequently asked questions

Q1: How much compensation can I get if a funeral home goes out of business?

A1: You may be entitled to 50% of the total amount of payments reported to the deposit protection organization. the remaining 50% is not legally protected and is difficult to get back. however, if you use our service, you will receive 100% of your original payment, which can be used to purchase services from another funeral home.

Q2: How do I find out the percentage of my funeral deposit?

A2: You can check the deposit coverage status by searching for a registered funeral company on the My Funeral Finder website. Alternatively, you can contact the Funeral Guarantee and Mutual Aid Association or the Korea Funeral Mutual Aid Association directly. it's safe to check regularly, at least once a year.

Q3: Which is safer, a funeral company mutual fund or a bank deposit?

A3: Legally, they both have the same protection. however, bank deposits have the advantage of being more transparent because they are directly managed by the financial institution. a 100% bank deposit is the safest, such as a 100-yuan sangjo. mutual aid societies are also legal, but it's a good idea to check their financial health.

Q4: How do I know if the funeral home I signed up with has gone out of business?

A4: You can check in real-time on the Find a Funeral Director website. Also, keep your address and contact information up to date with your provider so that if they go out of business, you'll be notified by the conservation organization. it's important to make a habit of checking the status of your business regularly, as this is a long-term contract of 10 years or more.

Q5: What is the difference between a funeral bond and a deposit?

A5: A funeral deposit is a legally mandated 50% coverage of your contributions. it is deposited in a bank or mutual and paid out to consumers in the event of a business closure. a funeral surety bond is an additional safeguard that some businesses voluntarily purchase. while deposits are required, fidelity bonds are optional, so checking to see if they're available will help you determine how safe a business is.

the bottom line

consumer harm from funeral home closures is still ongoing. however, you can prevent most of the damage by utilizing a service like MyFuneralGuide to ensure you get 100% of your money back, and by following a five-point checklist before signing up. with new models such as the 100-won sangjo, there are even more ways to sign up safely.

the most important thing is to check regularly. check the company's status and deposits on the Find My Funeral Home site once a year, and be sure to notify them of any address changes. after all, protecting your money starts with you taking an active interest in it.

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