Ala. Admin. Code r. 482-1-131-.06 - Preneed Funeral Contracts Or Prearrangements

The following information shall be adequately disclosed at the time an application is made, prior to accepting the applicant's initial premium or deposit; for a preneed funeral contract or prearrangement that is funded or to be funded by a life insurance policy:

(a) The fact that a life insurance policy is involved or being used to fund a prearrangement;

(b) The nature of the relationship among the soliciting agent or agents, the provider of the funeral or cemetery merchandise or services, the administrator and any other person;

(c) The relationship of the life insurance policy to the funding of the prearrangement and the nature and existence of any guarantees relating to the prearrangement;

(d) The impact on the prearrangement:

1. Of any changes in the life insurance policy including but not limited to, changes in the assignment, beneficiary designation or use of the proceeds;

2. Of any penalties to be incurred by the policyholder as a result of failure to make premium payments;

3. Of any penalties to be incurred or monies to be received as a result of cancellation or surrender of the life insurance policy;

(e) A list of the merchandise and services which are applied or contracted for in the prearrangement and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need;

(f) All relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the prearrangement;

(g) Any penalties or restrictions, including but not limited to geographic restrictions or the inability of the provider to perform, on the delivery of merchandise, services or the prearrangement guarantee; and

(h) If so, the fact that a sales commission or other form of compensation is being paid and the identity of the individuals or entities to whom it is paid.

Author: Commissioner of Insurance

Notes

Ala. Admin. Code r. 482-1-131-.06

New Rule: Filed May 25, 2004; effective January 1, 2005. Filed with LRS June 3, 2004. Rule is not subject to the Alabama Administrative Procedure Act.

Statutory Authority: Code of Ala. 1975, §§ 27-2-17, 27-12-1, et seq.