RELATES TO:
KRS
304.12-020,
304.12-240
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110 authorizes the Executive Director
of Insurance to adopt administrative regulations necessary for or as an aid to
the effectuation of any provision of the Kentucky Insurance Code. This
administrative regulation establishes disclosure requirements for life
insurance or annuity contracts which are used to fund preneed funeral contracts
or prearrangements.
Section 1.
Definitions. As used in this administrative regulation: "Preneed funeral
contract or pre-arrangement" shall have the meaning set forth in
KRS
304.12-240.
Section 2. Required Disclosure. If a life
insurance or annuity contract is to be used to fund a preneed funeral contract
or prearrangement, the following information shall be disclosed adequately when
an application is made for such life insurance or annuity contract prior to
acceptance of the applicant's initial premium or deposit:
(1) The fact that a life insurance or annuity
contract is involved or is being used to fund a preneed funeral contract or
prearrangement;
(2) 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;
(3) The relationship of the
life insurance or annuity contract to the funding of the preneed funeral
contract or prearrangement and the nature and existence of any guarantees
relating to the preneed funeral contract or prearrangement;
(4) The impact on the prearrangement of:
(a) Changes in the life insurance policy,
including, but not limited to, changes in the assignment, beneficiary
designation, or use of the proceeds;
(b) Penalties to be incurred by the contract
holder as a result of failure to make premium payments; and
(c) Penalties to be incurred or monies to be
received as a result of cancellation or surrender of the life insurance or
annuity contract;
(5) A
list of the merchandise and services which are applied or contracted for in the
preneed funeral contract or 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;
(6) An
explanation of any entitlements or obligations which arise if there is a
difference between the proceeds of the life insurance or annuity contract and
the amount actually needed to fund the preneed funeral contract or
prearrangement; and
(7) Any
penalties or restrictions, regarding either geographic restrictions or
constraints or the inability of the provider of funeral goods or services to
perform, on the delivery of merchandise, services, or the prearrangement
guarantee.
