HB 853 -- Preneed Funeral Contracts

Sponsor:  Wasson

This bill establishes licensing requirements for sellers, seller
agents, and providers of preneed funeral contracts and
establishes the Missouri Preneed Funeral Contract Act.

LICENSURE OF PRENEED PROVIDERS, SELLERS, AND AGENTS

The bill:

(1)  Authorizes the State Board of Embalmers and Funeral
Directors within the Department of Insurance, Financial
Institutions and Professional Registration to employ legal
counsel;

(2)  Exempts endowed care cemetery operators from licensure
requirements;

(3)  Requires applicants for a preneed provider license to make
application with the board; pay a licensing fee; be registered to
conduct business in this state with the Secretary of State;
identify the custodian of records and all sellers authorized by
the provider to sell preneed contracts; authorize the board to
inspect, examine, investigate, or audit all records; and be of
good moral character;

(4)  Requires applicants for a preneed seller license to make
application with the board; pay a licensing fee; be a Missouri
resident who is 18 years of age or older or registered to conduct
business in this state with the Secretary of State; identify the
custodian of records and all providers which have authorized the
seller to designate the person as a provider under the contract;
identify the financial institutions where any preneed trusts or
joint accounts are held; authorize the board to inspect, examine,
investigate, or audit all records; and be of good moral
character;

(5)  Requires applicants for a preneed agent registration to make
application with the board; pay a registration fee; pass the
Missouri law exam; be 18 years of age or older; identify each
seller for whom they are authorized to sell preneed contracts;
and be of good moral character;

(6)  Authorizes the board to refuse to issue, suspend, and revoke
certificates of registration or licenses and cause complaints to
be filed with the Administrative Hearing Commission for the
activities specified in the bill; and

(7)  Authorizes the board to adopt and enforce rules for the
transaction of its business and for the standards of service and
practice to be followed in the professions of embalming, funeral
directing, and selling preneed funeral contracts.

MISSOURI PRENEED FUNERAL CONTRACT ACT

The bill:

(1)  Specifies that the provisions of the act will apply only to
preneed contracts made after the effective date of the bill;

(2)  Requires the provider listed in the contract to provide
final disposition as specified in the contract;

(3)  Requires the seller to collect and properly deposit and
disburse all payments made by a purchaser to ensure a contract is
managed in compliance with the provisions of the bill;

(4)  Requires written contractual agreements between providers
and sellers.  Providers must notify the board of the contractual
relationships;

(5)  Specifies that preneed contracts must be in writing; include
the name, address, and phone number of the purchaser and
beneficiary; the name, address, phone number, and license number
of the provider and seller; provide details of the final
disposition; identify the funding mechanism of the contract;
include notice that the cancellation will not affect any life
insurance used for funding of the contract; include notice that
the purchaser will receive the cash surrender value of any
insurance funding the contract if canceled at a designated time;
include notice that the purchaser may transfer the provider
designation; identify whether the contract is revocable or
irrevocable; establish the terms for a cancellation; identify the
trust or joint account where the money will be deposited; include
the name, address, and phone number of any insurance company
issuing a policy to fund the contract; identify if the contract
is guaranteed or nonguaranteed; and include any required consumer
disclosures;

(6)  Designates preneed contracts as irrevocable only if the
purchaser is eligible to receive public assistance;

(7)  Allows purchasers to cancel or rescind revocable contracts
with or without cause;

(8)  Requires sellers of trust-funded contracts to deposit 100%
of the payments into a trust within 60 days of the receipt of the
money.  Trustees will be state or federally chartered financial
institutions authorized to exercise trust powers in this state;

(9)  Allows for the commingling of two or more contracts within
one trust;

(10)  Allows all expenses and taxes incurred by the trust to be
paid from income generated by the trust;

(11)  Entitles the seller and provider to income generated by the
trust as stipulated in the contract;

(12)  Requires the provider and the authorized person on behalf
of the beneficiary to sign the certificate of performance when
requesting payment from the seller;

(13)  Requires trustees to be held to the prudent investor
standard and to diversify the investments in the trust, unless
the trustee determines it would be better served without
diversification;

(14)  Prohibits providers, sellers, and preneed agents from
collecting from the purchaser of an insurance-funded contract any
amount in excess of what is required to pay the premiums on the
insurance policy.  Sellers cannot collect any fees from the
purchaser of an insurance-funded contract, other than those fees
assessed by the insurer;

(15)  Prohibits the use of a term life insurance policy to fund a
contract;

(16)  Allows sellers and purchasers to use joint accounts to fund
contracts;

(17)  Requires financial institutions to disburse funds from
canceled joint account contracts to the purchaser within 15 days
of cancellation.  In cases of a canceled trust-funded contract,
the trustee must return all of the trust property, less interest,
to the purchaser;

(18)  Gives a seller the right to cancel a contract which is in
default for 60 days.  Purchasers may remit delinquent payments if
the seller chooses not to cancel the contract.  Upon cancellation
by the seller, 80% of the contract payments will be refunded to
the purchaser;

(19)  Allows purchasers to choose alternate providers under the
original contract at no charge.  When this occurs, the seller has
the option of canceling the contract by paying the provider all
of the trust property, including the principal and interest;

(20)  Requires sellers to file annual reports with the board
containing the name, address, and contract number of each
contract sold in the last year; amount of each contract sold;
name, address, and license number of each preneed agent
authorized to sell on the seller's behalf; number of contracts
fulfilled in that year; name and address of each provider with
whom they have contractual arrangements; name and address of each
custodial record keeper; written consent to examine accounts and
records; and certification that the report is accurate and
complete;

(21)  Authorizes the board to establish an annual reporting fee
for each preneed contract sold in the year since the date of the
last report;

(22)  Authorizes the board to conduct random inspections,
investigations, and audits of providers, sellers, and agents and
any trust and joint account holding assets to fund contracts.
Subject to funding availability, the financial examinations of
sellers of contracts must be conducted at least once every five
years;

(23)  Gives the board subpoena power for the production of
records;

(24)  Allows the board; Division of Finance; Department of
Insurance, Financial Institutions and Professional Registration;
and the Attorney General's Office to share information regarding
any inspection, investigation, examination, or audit;

(25)  Requires providers and sellers who cease doing business in
this state to notify the board at least 60 days prior to the
liquidation of assets or stock;

(26)  Allows contracts to offer credit life insurance; and

(27)  Requires the board to maintain as a closed and confidential
record all personal information about any preneed purchaser or
beneficiary.

Anyone violating the provisions of the bill will be guilty of a
class C felony.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:25 am