North Carolina Funeral Law Practice Exam

What percentage of the investment income does a burial association reserve?

1. 10%

2. 5%

3. 15%

4. 2%

The correct answer is: 5%

In North Carolina, burial associations are required to reserve a specific percentage of their investment income to ensure the financial stability and integrity of the funds held for burial services. The correct percentage, which is 5%, serves several important functions. First, reserving this portion helps to assure that funds are available to meet the obligations that arise from contracts with members for burial services. By setting aside 5% of investment income, burial associations maintain a buffer that supports future payouts for funerals, thus ensuring that members receive the benefits they are entitled to when the time comes. Additionally, this percentage is in line with regulatory frameworks established by the state to promote responsible financial practices among burial associations. It balances the need for the associations to retain enough revenue for operational costs while also fulfilling their commitments to members. Overall, the 5% reserve helps to safeguard the interests of both the burial association and its members by providing a measure of financial security and adhering to standard practices as mandated by North Carolina law.