Bill Text: VA HB1333 | 2010 | Regular Session | Introduced
Bill Title: Preneed funeral contracts; SCC to oversee contracts funded by proceeds of life insurance policy.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-02-04 - House: Stricken from docket by Commerce and Labor by voice vote [HB1333 Detail]
Download: Virginia-2010-HB1333-Introduced.html
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10104120D Be it enacted by the General Assembly of Virginia: 1. That §§38.2-1809, 38.2-3100.3, and 54.1-2820 of the Code of Virginia are amended and reenacted as follows: §38.2-1809. Power of Commission to investigate affairs of persons engaged in insurance business; penalties for refusal to permit investigation. A. The Commission shall have power to examine and investigate
the business affairs of any person engaged or alleged to be engaged in the
business of insurance in B. Except as otherwise provided in this title, every licensee shall retain all of his records relative to insurance transactions for the three previous calendar years except that records of premium quotations which are not accepted by the insured or prospective insured need not be kept. These records shall be made available promptly upon request for examination by the Commission or its employees without notice during normal business hours. §38.2-3100.3. Requirements of life insurance or annuity contracts used to fund preneed funeral contracts. A. For purposes of this section "Life insurance or annuity contracts used to fund preneed funeral contracts" includes any life insurance policy or annuity contract that is marketed or sold in the Commonwealth through the use of application or marketing materials that include information regarding costs associated with a funeral, including a casket or vault, in a manner that implies a connection between the amount of coverage and the cost of a funeral. "Preneed funeral contract" means any agreement where payment is made by the insured prior to the receipt of services or supplies contracted for, which evidences arrangements prior to death for (i) the providing of funeral services or (ii) the sale of funeral supplies. B. Each individual and group life insurance policy issued or issued for delivery in Virginia, each individual and group annuity contract issued or issued for delivery in Virginia, and each certificate issued in connection with a group life insurance policy or group annuity contract issued or issued for delivery in Virginia shall include a provision specifying the means by which face amount adjustments will be made and benefits payable upon death will be adjusted, according to the provisions of subsection C of § 54.1-2820, when such a policy or contract will be used to fund a preneed funeral contract. C. Each insurer proposing to issue individual or group life insurance policies or individual or group annuity contracts in Virginia for purposes of funding preneed funeral contracts shall clearly disclose the intended purpose and market for such policies and contracts when submitting the forms with the Commission for approval, in accordance with §38.2-316. D. No person issuing or issuing for delivery in Virginia an individual or group life insurance policy, individual or group annuity contract, or certificate issued in connection with a group life insurance policy or group annuity contract that will be used to fund a preneed funeral contract shall engage in any conduct prohibited by Chapter 28 (§54.1-2800 et seq.) of Title 54.1 or any regulations adopted by the Board of Funeral Directors and Embalmers pursuant thereto. Without limiting the foregoing, an insurer proposing to issue individual or group life insurance policies or annuity contracts in Virginia for purposes of funding preneed funeral contracts shall not use or employ a person to entice another to purchase a product or to direct the course of action and choice of the buyer in a preneed funeral contract sale. §54.1-2820. Requirements of preneed funeral contracts. A. It shall be unlawful for any person residing or doing
business within 1. Is made on forms prescribed by the Board and is written in clear, understandable language and printed in easy-to-read type, size and style; 2. Identifies the seller, seller's license number and contract buyer and the person for whom the contract is purchased if other than the contract buyer; 3. Contains a complete description of the supplies or services purchased; 4. Clearly discloses whether the price of the supplies and services purchased is guaranteed; 5. States if funds are required to be trusted pursuant to § 54.1-2822, the amount to be trusted, the name of the trustee, the disposition of the interest, the fees, expenses and taxes which may be deducted from the interest and a statement of the buyer's responsibility for taxes owed on the interest; 6. Contains the name, address and telephone number of the Board and lists the Board as the regulatory agency which handles consumer complaints; 7. Provides that any person who makes payment under the contract may terminate the agreement at any time prior to the furnishing of the services or supplies contracted for except as provided pursuant to subsection B; if the purchaser terminates the contract within 30 days of execution, the purchaser shall be refunded all consideration paid or delivered, together with any interest or income accrued thereon; if the purchaser terminates the contract after 30 days, the purchaser shall be refunded any amounts required to be deposited under §54.1-2822, together with any interest or income accrued thereon; 8. Provides that if the particular supplies and services specified in the contract are unavailable at the time of delivery, the seller shall be required to furnish supplies and services similar in style and at least equal in quality of material and workmanship and the representative of the deceased shall have the right to choose the supplies or services to be substituted; 9. Discloses 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 prearrangement guarantee; and 10. Complies with all disclosure requirements imposed by the Board. If the contract seller will not be furnishing the supplies and services to the purchaser, the contract seller must attach to the preneed funeral contract a copy of the seller's agreement with the provider. B. Subject to the requirements of §54.1-2822, a preneed funeral contract may provide for an irrevocable trust or an amount in an irrevocable trust that is specifically identified as available exclusively for funeral or burial expenses, where: 1. A person irrevocably contracts for funeral goods and services, such person funds the contract by prepaying for the goods and services, and the funeral provider residing or doing business within the Commonwealth subsequently places the funds in a trust; or 2. A person establishes an irrevocable trust naming the funeral provider as the beneficiary; however, such person shall have the right to change the beneficiary to another funeral provider pursuant to §54.1-2822. C. If a life insurance or annuity contract is used to fund the preneed funeral contract, the life insurance or annuity contract shall provide either that the face value thereof shall be adjusted annually by a factor equal to the annualized Consumer Price Index as published by the Bureau of Labor Statistics of the United States Department of Labor, or a benefit payable at death under such contract that will equal or exceed the sum of all premiums paid for such contract plus interest or dividends, which for the first 15 years shall be compounded annually at a rate of at least five percent. In any event, interest or dividends shall continue to be paid after 15 years. In addition to the authority of the Board to regulate the sale of preneed funeral contracts pursuant to this chapter, the State Corporation Commission shall be authorized to regulate the sale of any individual or group life insurance policy, individual or group annuity contract, or certificate issued in connection with a group life insurance policy or annuity contract that will be used to fund a preneed funeral contract, as provided in §§38.2-1809 and 38.2-3100.3. In addition, the following must also be disclosed as prescribed by the Board: 1. The fact that a life insurance policy or annuity contract is involved or being used to fund the preneed contract; 2. The nature of the relationship among the soliciting agent, the provider of the supplies or services, the prearranger and the insurer; 3. The relationship of the life insurance policy or annuity contract to the funding of the preneed contract and the nature and existence of any guarantees relating to the preneed contract; and 4. The impact on the preneed contract of (i) any changes in the life insurance policy or annuity contract including but not limited to changes in the assignment, beneficiary designation or use of the proceeds, (ii) any penalties to be incurred by the policyholder as a result of failure to make premium payments, (iii) any penalties to be incurred or moneys to be received as a result of cancellation or surrender of the life insurance policy or annuity contract, and (iv) 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 or annuity contract and the amount actually needed to fund the preneed contract. D. When the consideration consists in whole or in part of any real estate, the contract shall be recorded as an attachment to the deed whereby such real estate is conveyed, and the deed shall be recorded in the clerk's office of the circuit court of the city or county in which the real estate being conveyed is located. E. If any funeral supplies are sold and delivered prior to the death of the subject for whom they are provided, and the seller or any legal entity in which he or a member of his family has an interest thereafter stores these supplies, the risk of loss or damage shall be upon the seller during such period of storage. 2. That the State Corporation Commission shall conduct a review of its existing regulations regarding the marketing of life insurance policies and, if appropriate, amend such regulations to address the failure, if any is found to exist, of existing regulations to ensure that life insurance policies associated with the costs of funerals are not marketed through the use of deceptive or misleading practices. |
