Bill Text: MS HB997 | 2011 | Regular Session | Comm Sub

Mississippi House Bill 997 (Prior Session Legislation)

Bill Title: Preneed contracts; allow naming of substitute provider at any time, and require all to be funded by insurance beginning 7-1-13.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Failed) 2011-02-10 - Died In Committee [HB997 Detail]

Download: Mississippi-2011-HB997-Comm_Sub.html

MISSISSIPPI LEGISLATURE

2011 Regular Session

To: Public Health and Human Services

By: Representative Holland

House Bill 997

(COMMITTEE SUBSTITUTE)

AN ACT TO AMEND SECTION 75-63-63, MISSISSIPPI CODE OF 1972, TO AUTHORIZE A CONTRACT BENEFICIARY OR HIS REPRESENTATIVES UNDER A PRENEED CONTRACT TO NAME A SUBSTITUTE PROVIDER FOR THE CONTRACT AT ANY TIME BEFORE THE PERFORMANCE OF THE CONTRACT; TO PROVIDE THAT IF THE PRENEED CONTRACT IS FUNDED BY TRUST, THE TRUSTEE SHALL TRANSFER ALL OF THE FUNDS IN TRUST, INCLUDING ASS0CIATED EARNINGS AND INCOME ON THE FUNDS, TO THE SUBSTITUTE PROVIDER WITHIN TEN DAYS FROM RECEIPT OF WRITTEN NOTIFICATION; TO PROVIDE THAT IF THE PRENEED CONTRACT IS FUNDED BY INSURANCE, THE CHANGE OF BENEFICIARY SHALL BE MADE IN WRITING BY THE ORIGINAL PROVIDER TO THE INSURANCE COMPANY WITHIN TEN DAYS FROM RECEIPT OF WRITTEN NOTIFICATION; TO AMEND SECTIONS 75-63-59 AND 75-63-61, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PRECEDING PROVISIONS; TO AMEND SECTION 75-63-55, MISSISSIPPI CODE OF 1972, TO REQUIRE THAT ALL PRENEED CONTRACTS SOLD ON OR AFTER JULY 1, 2013, BE FUNDED BY INSURANCE; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 75-63-63, Mississippi Code of 1972, is amended as follows:

75-63-63. * * * The contract beneficiary or his representatives may name a substitute provider for the preneed contract at any time before the performance of the contract. The naming of the substitute provider shall be in writing. If the preneed contract is funded by trust, the notice of substitution shall be made in writing to the trustee and the Secretary of State, and the trustee shall transfer all of the funds in trust, including associated earnings and income on the funds, to the substitute provider within ten (10) days from receipt of the written notification. If the preneed contract is funded by insurance, the change of beneficiary shall be made in writing by the original provider to the insurance company within ten (10) days from receipt of the written notification. After the trustee has transferred the funds in trust and associated earnings and income to the substitute provider, or after the insurance company has made the change of beneficiary, the original provider shall be relieved of all obligations to perform the contract including all obligations of reporting and accounting, and the substitute provider shall assume all obligations to perform the contract including all obligations of reporting and accounting.

SECTION 2. Section 75-63-59, Mississippi Code of 1972, is amended as follows:

75-63-59. (1) If the contract is funded by trust, the Secretary of State shall be given a copy of the trust agreement, which the Secretary of State shall review and approve in advance. The Secretary of State may at any time require the submission of the trust agreement for review and approval from any preneed provider. The Secretary of State shall approve in advance any amendments or modifications to the trust agreement. The Secretary of State shall be informed in writing as to how the assets of the trust are held. In the event of any change in the investment composition of the trust assets, or change in the trustee or trust institution, the Secretary of State shall be informed within ten (10) days after the time the change occurs.

(2) Any trustee, other than a financial institution, shall not be the contract provider, the seller, or an officer or director of the contract provider if the contract provider is a corporation.

(3) Not later than the fifth day of the following month from when funds are received, the contract seller shall place in a trust account in a financial institution as defined by this article at least eighty-five percent (85%) of the funds received for funeral services and merchandise. The contract shall disclose to the purchaser in bold face type the percentage of funds the seller is required to trust along with the name of the trust officer, the trust institution, the address and phone number of the same. The purchaser shall initial the corresponding paragraph in the contract indicating notice of the trust percentage and acknowledge being provided the name of the trust officer, the trust institution, address and phone number. The contract seller must provide the trustee with documentation containing the contract owner's identity and allocable share for each remittance. Trust accounts shall be carried in the name of the preneed seller, but accounting records shall be established and maintained for each individual preneed funeral contract beneficiary showing the amounts deposited and invested. The Secretary of State may by rule address the recordkeeping required for interest, dividends, increases and accretions earned.

(4) Reasonable annual trust fees including any income taxes owed to the State of Mississippi and/or the United States Treasury may be withheld from the earnings of the trust.

(5) At the time of death, if the contract provider provides the merchandise and services indicated in the contract, the contract provider shall furnish to the trustee a copy of the preneed contract, contract owner's death certificate or proof of death, and a letter of performance indicating that the contracted merchandise and services were provided by the contract provider to the contract beneficiary. Upon receipt of the letter of performance and death certificate, or proof of death, the trustee shall pay to the contract provider all funds, which shall not be less than the amount deposited in trust. In the limited instance only when a preneed provider furnishes a personalized, engraved marker, headstone or monument before death, the trustee may disburse to the preneed provider compensation for the engraved marker, headstone or monument as well as any associated engraving, setting or delivery fees. In those instances, no disbursement from the trust shall be made until the trustee receives from the preneed provider a delivery ticket or invoice, documentation for the engraving of identifying information regarding the purchaser, and a letter of performance indicating that the engraved marker, headstone or monument has been provided.

Any trust officer or trust institution that releases trust funds for funeral services or merchandise in a manner contrary with the provisions of this article shall be liable for the same. Furthermore, any trustee or trust institution that engages in fraud, deceit, misrepresentation, or misappropriation of trust funds to the detriment of a contract provider or a contract beneficiary shall be liable for the same.

(6) If the contract provider, or the substitute provider if one is named under Section 75-63-63, does not furnish merchandise and services as provided in the preneed contract, the trustee shall pay to the estate of the contract beneficiary not less than the amount deposited in trust, including associated earnings and income, within ten (10) days from notification of the death of the contract beneficiary.

(7) Preneed trust funds are exempt from all claims of creditors of the preneed provider, except as to the claims of the contract purchaser or his representatives, and cannot be used as collateral, pledged or in any way encumbered or placed at risk.

SECTION 3. Section 75-63-61, Mississippi Code of 1972, is amended as follows:

75-63-61. (1) If the preneed contract is funded with insurance, and payment is made to the contract seller rather than directly to the life insurance company, the contract seller shall timely submit to the insurance company all premiums collected from the contract purchaser.

(2) At the time of death, the proceeds of the policy shall be settled in accordance with the policy. If the contract provider furnishes merchandise and services as indicated in the contract, the contract provider is entitled to retain the proceeds of the policy in accordance with the preneed contract. If the contract provider, or the substitute provider if one is named under Section 75-63-63, does not furnish merchandise and/or services as provided in the preneed contract, the contract provider or substitute provider shall pay to the estate of the contract beneficiary the proceeds of the policy within ten (10) days of receipt of these proceeds.

SECTION 4. Section 75-63-55, Mississippi Code of 1972, is amended as follows:

75-63-55. (1) No person, firm, partnership, association or corporation may directly or indirectly, or through an agent, engage in the sale of preneed contracts or preneed contracts for caskets except as authorized under this article. Any person, establishment or company required to register under Section 73-11-67 that sells preneed contracts for caskets, either directly or indirectly or through an agent, shall be required to meet all of the requirements of this article that are applicable to preneed contracts. All preneed contracts sold shall be evidenced in writing on forms approved by and on file with the Secretary of State. No contract form may be used without prior approval of the Secretary of State. No amendment or modification can be made to any preneed contract without prior approval of the Secretary of State. The use of any oral preneed contract, or any written contract, in a form not approved by the Secretary of State, shall be a violation of the chapter and subject to the penalties provided in Section 75-63-69. The contract shall clearly indicate the names and addresses of the buyer, contract beneficiary, contract provider and seller. The Secretary of State may by rule or regulation prescribe specific contract content or a standard contract form required for use by all contract providers describing the rights and responsibilities of the contract provider and the contract owner. However, no standard form contract or contract language shall be inconsistent in any way with the provisions of this article. The Secretary of State is further authorized to implement a systematic method to identify and track preneed contract sales for the purpose of reconciling sales reported to the Secretary of State on the annual report required by Section 75-63-67 with trust fund activity statements and the provider's business records.

(2) The contract shall clearly indicate all merchandise covered by the contract, a description of the merchandise quality, and the total cost of all merchandise covered by the contract. The contract shall list all services covered by the contract and the total cost for all services covered by the contract. The contract shall list all cash advance items covered by the contract and the total cost for all cash advance items covered by the contract.

(3) All preneed contracts sold shall be funded by trust or insurance as defined in this article or evidenced by a warehouse receipt, as contemplated in Uniform Commercial Code-Documents of Title, Section 75-7-101 et seq. All merchandise placed on a warehouse receipt or placed in storage shall be reported to the Secretary of State in the preneed report as required by Section 75-63-67. All preneed contracts sold on or after July 1, 2013, shall be funded by insurance as defined in this article.

(4) If the preneed contract is funded by a policy of insurance, as defined by Section 83-5-5, a copy of the insurance policy shall be furnished to the contract beneficiary within fifteen (15) days of issue. Such insurance shall be subject to the insurance laws of the state.

The contract beneficiary shall be furnished the following:

(a) A list of the merchandise, including a description of the merchandise quality, and services which are applied or contracted for in the preneed contract 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;

(b) 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 preneed contract; and

(c) 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 preneed guarantees.

If the preneed contract is not funded by a policy of insurance, as defined by Section 83-5-5, a copy of the preneed contract shall be furnished to the contract beneficiary at the time of purchase.

(5) If the preneed contract is funded by trust, the contract shall indicate the name, address and telephone number of the trustee; the trust institution; the amount to be paid; the frequency of payment; and the length of time payments will be paid into the trust. The contract beneficiaary must initial on the contract the percentage required to be trusted and the designation of the trust officer. In addition, the contract should clearly indicate any exclusions or limitations of the preneed contract including, but not limited to, any additional payments that may be owed if the contract beneficiary dies before the agreed upon payment period is completed.

(6) The preneed contract shall indicate whether it is a standard contract or an inflation proof contract. The contract shall clearly indicate which merchandise and services are guaranteed as to price.

(7) The preneed contract shall contain the address and phone number of the Secretary of State with instructions that consumer complaints may be filed with the Secretary of State.

(8) If the preneed contract is paid in multiple payments, the contract should indicate the amount, frequency and duration of the payments and the amount of any interest charged. The contract shall also include the impact on the contract if payments are not made.

(9) The use of any oral preneed contract, or any written contract, in a form not approved by the Secretary of State, shall be a violation of this article and subject to the penalties provided in Section 75-63-69.

SECTION 5. This act shall take effect and be in force from and after July 1, 2011.