Bill Text: NJ A1459 | 2010-2011 | Regular Session | Introduced


Bill Title: Requires licensure as insurance producer to sell certain funeral insurance policies; prohibits financing of certain preneed funeral arrangements with reverse mortgage.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Failed) 2010-02-08 - Withdrawn from Consideration [A1459 Detail]

Download: New_Jersey-2010-A1459-Introduced.html

ASSEMBLY, No. 1459

STATE OF NEW JERSEY

214th LEGISLATURE

 

PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION

 


 

Sponsored by:

Assemblyman  JOHN S. WISNIEWSKI

District 19 (Middlesex)

Assemblyman  VINCENT PRIETO

District 32 (Bergen and Hudson)

 

Co-Sponsored by:

Assemblywomen Quigley, Rodriguez, Assemblymen Ramos and Conners

 

 

 

 

SYNOPSIS

     Requires licensure as insurance producer to sell certain funeral insurance policies; prohibits financing of certain preneed funeral arrangements with reverse mortgage.

 

CURRENT VERSION OF TEXT

     Introduced Pending Technical Review by Legislative Counsel

  


An Act concerning the sale of certain prepaid funeral agreements and amending P.L.1997, c.322 and P.L.1993, c.147.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.  Section 32 of P.L.1997, c.322 (C.17:44B-32) is amended to read as follows:

     32.  Individuals acting as insurance producers with respect to societies shall be licensed in accordance with the provisions of the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et al.).  Notwithstanding the provisions of this section or of any other law to the contrary, a license as an insurance producer shall not be required of any agent, representative or member of a fraternal benefit society who devotes, or intends to devote, less than 50 percent of his time to the solicitation and procurement of insurance contracts for that fraternal benefit society and who receives, or intends to receive, any commission or other compensation directly dependent on the amount of insurance. Any person who in the preceding calendar year has solicited or procured any of the following contracts of insurance on behalf of a fraternal benefit society shall be presumed to have devoted, or intended to devote, 50 percent of his time to the solicitation or procurement of insurance contracts:

     a.  Life insurance contracts that, in the aggregate, exceed $200,000 of coverage for all lives insured for the preceding calendar year;

     b.  A permanent life insurance contract offering more than $10,000 of coverage on an individual life;

     c.  A term life insurance contract offering more than $50,000 of coverage on an individual life;

     d.  An insurance contract, other than a life insurance contract, that the fraternal benefit society may write that insures the individual lives of more than 25 persons; [or]

     e.  Any variable life insurance or variable annuity contract; or

     f.  Any "funeral insurance policy" as defined in section 24 of P.L.1993, c.147 (C.17B:17-5.1).

(cf:  P.L.2006, c.57, s.1)

 

     2.  Section 9 of P.L.1993, c.147 (C.45:7-90) is amended to read as follows:

     9.  No person shall:

     a.  Advertise "discounts," "rebates" or other price reduction incentives:

     (1) which are not actual reductions of the retail prices of a provider's current general price list; or 

     (2) which are based solely on a funeral insurance policy's premium rate tables. 

     b.  In offering to provide preneed funeral arrangements or prepaid funeral agreements, use the word "trust" or "trust funded" in any name, advertisement or solicitation in a misleading manner. 

     c.  Fund or finance preneed funeral arrangements or a prepaid funeral agreement through retail installment contracts, reverse mortgages or credit life insurance, or in any manner other than a funeral trust or funeral insurance policy. 

     d.  Waive any provision of this act in any agreement in which a person pays money under, or in connection with, a prepaid funeral agreement.  Any agreement to waive any portion of this act shall render the agreement voidable by the purchaser. 

(cf:  P.L.1993, c.147, s.9)

 

     3.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill provides that individuals who solicit or procure funeral insurance policies on behalf of fraternal benefit societies must be licensed as insurance producers.  The bill also prohibits the funding or financing of preneed funeral arrangements or prepaid funeral agreements through the use of reverse mortgages.

     Prior to 2006, all individuals acting as insurance producers on behalf of fraternal benefit societies were required to be licensed as such.  In 2006, the law was amended to exempt any agent, representative, or member of a fraternal benefit society who devotes, or intends to devote, less than 50 percent of his time to the solicitation and procurement of insurance contracts and who receives, or intends to receive, any commission or other compensation directly dependent on the amount of insurance. However, under this exemption, the solicitation and procurement of certain contracts are regarded as constituting the devotion of such an amount of time as to make the person ineligible for the licensing exemption.  This bill thus includes funeral insurance policies among the types of insurance which are regarded as requiring insurance producer licensure for agents of a fraternal benefit society.

     A "funeral insurance policy" is defined by statute as any insurance policy or annuity contract that, at the time of issue, was intended to provide, or which was explicitly marketed for the purpose of providing, funds to the provider, whether directly or indirectly, at the time of the insured's death in connection with a prepaid funeral agreement.  A "fraternal benefit society" is any incorporated society, order or lodge, conducted solely for the benefit of its members and their beneficiaries and not-for-profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits to its members.

     The bill also prohibits the funding or financing of preneed funeral arrangements or prepaid funeral agreements through the use of reverse mortgages.  Certain inappropriate uses of reverse mortgages have begun to cause consumer lending concerns, among them, the use of a reverse mortgage as a way of financing preneed funeral arrangements.  This bill would prevent any such marketing of the reverse mortgage in New Jersey.

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