An Act Regarding Preneed Funeral Insurance
Maine Legislature, Session 126, LD 1018
Committee: Insurance and Financial Services
Sponsors: BECK, HASKELL, CRAFTS, DILL, ALFOND, CUSHING
Amends: 24-A MRSA §711, 24-A MRSA §2176, 24-A MRSA §2176-A, 32 MRSA §1401, 32 MRSA §1402

Legislative Document 
No. 1018 
H.P. 716 
House of Representatives, March 14, 2013 
An Act Regarding Preneed Funeral Insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative BECK of Waterville. 
Cosponsored by Senator HASKELL of Cumberland and 
Representatives: CRAFTS of Lisbon, DILL of Old Town, Senators: President ALFOND of 
Cumberland, CUSHING of Penobscot. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  24-A MRSA §711 is enacted to read: 
§711.  "Preneed insurance" defined 
For the purposes of this Title, "preneed insurance" means any life insurance policy or 
certificate that is issued with an assignment as consideration for a prearrangement 
agreement for goods and services to be provided at the time of and following the death of 
the insured.  Goods and services may include, but are not limited to, embalming, 
cremation, body preparation, viewing, visitation, coffin, urn, memorial stone and 
transportation of the deceased.  The status of the policy or contract as preneed insurance 
is determined at the time the preneed contract is signed and the policy is assigned. 
Sec. 2.  24-A MRSA §2176, as amended by PL 1999, c. 258, §1, is further 
amended to read: 
§2176.  Funeral and burial service contracts prohibited 
An insurer may not contract or agree with any funeral director, funeral establishment, 
mortuary establishment, cemetery, cemetery corporation or association, crematorium, 
mausoleum or columbarium or any representative of any of these directors or 
establishments to the effect that the director or establishment shall will conduct the 
funeral, burial, or cremation or other disposal of the remains of any individual insured by 
the insurer.  An insurer may not retain, utilize or employ any director or establishment as 
a producer or agency of the insurer and a director or establishment may not act as or 
purport to be an insurance producer or engage in insurance producer activities.  Nothing 
in this section prevents compliance with Title 39-A, section 216, or the use of an 
insurance policy, including, subject to the provisions of section 2420, the assignment of 
rights under life insurance contracts, to provide security for the payment for a funeral, 
burial or cremation or, subject to chapter 27, the naming of a funeral home or funeral 
director as beneficiary under a life insurance policy to provide payment for a funeral, 
burial or cremation.  Nothing in this section prohibits the use of an insurance policy as an 
investment by a mortuary trustee pursuant to Title 32, section 1401. 
Sec. 3.  24-A MRSA §2176-A is enacted to read: 
§2176-A.  Disclosures required for the sale of preneed insurance 
1.  Disclosures.  At the time an application is made, and 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 preneed insurance policy, an insurer, agent or broker 
shall adequately disclose the following information: 
A.  The fact that a preneed 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 preneed 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 preneed 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; and 
(3)  Of any penalties to be incurred or money to be received by the policyholder 
as a result of cancellation or surrender of the preneed insurance policy; 
E.  A list of the merchandise and services that 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 preneed 
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 or services 
or the prearrangement guarantee; and 
H.  Whether a sales commission or other form of compensation is being paid and the 
identity of the individual or entity to whom it is paid. 
Sec. 4.  32 MRSA §1401, sub-§1, as amended by PL 2007, c. 402, Pt. J, §1, is 
further amended to read: 
1.  Plan requirements.  Except as provided in subsection subsections 1-A and 1-B, 
any a prearranged funeral or burial plan contracted or undertaken within this State must 
comply with the following. 
A.  All money paid during a person's lifetime to any individual, firm, association, 
partnership or corporation, by that person or by someone on behalf of that person, 
under an agreement that services will be performed or personal property will be 
delivered in connection with the disposition of that person's body after death must be 
deposited by the payee within 10 days after receipt of the money in a separate 
account in a financial institution or credit union authorized to do business in this 
State, as defined in Title 9-B, section 131, subsections 12-A and 17-A, in the name of 
the payee as mortuary trustee for the person for whose benefit the payment was made 
and must be held in that account together with interest if any.  If money is paid by 
check, share draft or money order, the payee shall instruct the payor to make the 
instrument payable to the financial institution or credit union into which it is to be 
deposited and to include on the instrument the name of the mortuary trustee and the 
person for whose benefit the payment was made. 
B.  The payee shall deposit the money in either a federally insured deposit or share 
account or a trust account; the type of account must be disclosed to the payor or the 
payor's representative and a deposit in a trust account may be invested in or used to 
purchase only the following: 
(1)  Federally insured deposit or share accounts; 
(2)  Securities issued, insured or guaranteed by the United States or by any 
agency or corporate or other instrumentality of the United States; 
(3)  Municipal securities that are exempt from registration under Title 32, section 
16201, subsection 1; and 
(4)  Permanent life insurance, other than variable life insurance and annuities, 
from an insurer authorized to transact insurance in this State, subject to the 
provisions of Title 24-A, chapter 27.  A payee or mortuary trustee may not 
receive any commission, fee or other consideration from an insurer in connection 
with the procurement or purchase of insurance permitted by this subparagraph. 
Except for fees allowed by this section, all investments made with trust assets remain 
trust assets. 
C.  Within 30 days after the deposit of funds by the payee, the financial institution or 
credit union shall provide a written confirmation of the deposit, including the amount 
deposited, to the payor or the payor's legal representative. Nothing in this section may 
be construed to prevent the direct transfer of these funds to another financial 
institution or credit union by payee transfer, by financial institution or credit union 
merger or consolidation or by operation of law, provided that within 30 days after the 
direct transfer of the funds, the recipient financial institution or credit union shall 
provide a written confirmation of the deposit, including the amount deposited, to the 
payor or the payor's legal representative. 
D.  The agreement must be in writing and a copy must be furnished to the payor or 
the payor's legal representative by the payee when the agreement is executed.  The 
agreement may be revocable or irrevocable; however, if irrevocable, there must be a 
provision to allow for the transfer of the account by the appointment of successor 
trustees.  The agreement must clearly state the name of the initial financial institution 
or credit union into which the money will be deposited and must direct the payor to 
send a copy of the agreement to the named financial institution or credit union.  The 
agreement must clearly state terms providing for disposition of excess funds after 
funeral goods and services have been provided.  The agreement must clearly state any 
fees that may be charged against the account; fees must be reasonable, as defined by 
the board, and may be charged only: 
(1)  Upon transfer of the account by the appointment of a successor trustee; 
(2)  Upon revocation of the agreement if the agreement is revocable; and 
(3)  For the actual financial and tax administration of the account. 
The payee shall maintain a complete record of the deposit of all funds, including 
principal and interest.  The record must be available for inspection by the payor, the 
payor's legal representative, the commissioner's designee or an inspector for the board 
and must contain the name and address of the financial institution or credit union 
currently in possession of the funds and the dates and amounts of deposits. 
E.  The funds may be directed by the payee to another financial institution or credit 
union or directed back to the payor or the payor's legal representative, if otherwise 
lawful and permitted by contract, on written instructions of the payor or the payor's 
legal representative.  The funds may only be withdrawn by the payee on presentation 
of a certified copy of the death certificate of the person for whose benefit the funds 
were paid, in which event they must be used in accordance with the agreement. 
Sec. 5.  32 MRSA §1401, sub-§1-B is enacted to read: 
1-B.  Plan funded with proceeds of preneed insurance policy.  A prearranged 
funeral or burial plan agreement may be funded with proceeds of a preneed insurance 
policy in accordance with this subsection. 
A.  During a person's lifetime, a person or that person's legal representative may enter 
into an agreement that services will be performed or personal property will be 
delivered in connection with the disposition of that person's body after death by the 
assignment of proceeds of a preneed insurance policy to the funeral establishment 
upon that person's death. 
B.  An agreement under paragraph A must be in writing and a copy must be furnished 
to the person or the person's legal representative by the funeral establishment when 
the agreement is executed.  The agreement must identify the parties to the agreement 
and must be signed by an authorized representative of the funeral establishment.  The 
agreement may or may not be guaranteed.  The agreement may be revocable or 
irrevocable; however, if the agreement is irrevocable, there must be a provision to 
allow for the transfer of the life insurance proceeds to a successor funeral 
establishment.  The agreement must clearly state terms providing for disposition of 
excess funds after funeral goods and services have been provided. 
C.  The receipt of a commission for the sale of preneed insurance does not constitute 
a violation of section 1455-B, subsection 5. 
This subsection may not be construed to alter the terms of a preneed insurance policy or 
supersede any law governing the regulation of life insurance policies. 
Sec. 6.  32 MRSA §1401, sub-§2, as enacted by PL 1999, c. 258, §2 and affected 
by §3, is amended to read: 
2.  Rulemaking.  The board shall adopt rules regarding prearranged funeral 
agreements, including, but not limited to: 
A.  The form, format and content of trust agreements; 
B.  Standards regarding when service contracts are required in conjunction with trust 
agreements and the form, format and content of the service contracts; 
C.  The establishment of reasonable fees that may be charged only pursuant to 
subsection 1, paragraph D; and 
D.  Inspection of trust agreements, account information and any related 
documentation.; and 
E.  The form, format and content of prearranged funeral agreements funded by 
preneed insurance. 
Rules adopted pursuant to this section are routine technical rules under the Maine 
Revised Statutes, Title 5, chapter 375, subchapter II-A 2-A. 
Sec. 7.  32 MRSA §1402, first ¶ is amended to read: 
No A funeral home, funeral establishment or person holding a license under this 
chapter shall may not as, or through, an agent or principal solicit a prearranged funeral 
service or plan for any person or persons. "Prearranged funeral service or plan" shall 
mean as used in this section means any funeral service or plan which that is arranged, 
planned or determined prior to the demise of a person or persons for whom the funeral 
service is to be performed. Funeral homes, funeral establishments and licensees under this 
chapter may enter into contracts or agreements for prearranged funeral services or plans 
provided that as long as they do not in any manner either as, or through, principals or 
agents solicit such contract or agreement.  Nothing in this section prohibits the sale of 
preneed insurance as defined in Title 24-A, section 711 and as set forth in section 1401, 
subsection 1-B to a consumer who has contacted a funeral home to prearrange a funeral. 
SUMMARY 
This bill: 
1.  Defines preneed insurance and permits its sale in the State; 
2.  Requires the State Board of Funeral Service to amend the rules governing 
prearranged funeral agreements to provide the form, format and content of prearranged 
funeral agreements funded by preneed insurance; 
3.  Permits a funeral director to sell preneed insurance to a consumer who has 
approached a funeral home to preplan a funeral; 
4.  Requires disclosures with regard to the sale of preneed insurance that are 
consistent with the National Association of Insurance Commissioners' life insurance 
disclosure model; and 
5.  Authorizes the payment of commissions in connection with the sale of preneed 
insurance.