2023 Tennessee Code › Title 62 - PROFESSIONS, BUSINESSES AND TRADES (§§ 62-1-101 — 62-76-203) › Chapter 5 - FUNERAL DIRECTORS AND EMBALMERS (§§ 62-5-101 — 62-5-810) › Part 4 - TENNESSEE PREPAID FUNERAL BENEFITS ACT (§§ 62-5-401 — 62-5-417) › Section 62-5-409 - Prearrangement insurance policy

(a)
If the pre-need funeral contract purchaser chooses to fund the contract by a prearrangement insurance policy, the enrollment or application form for the prearrangement insurance policy or certificate shall be submitted to the insurance company by the pre-need sales agent within fifteen (15) calendar days of receipt.
(b)
It is unlawful for any life insurance company, fraternal benefit society or other similar company, association or society issuing prearrangement insurance policies, by whatever name they may be called, upon the lives of citizens of this state, to:
(1)
Designate, in the policy or otherwise, the person, firm or corporation to conduct the funeral of the insured, or to organize, promote or operate any enterprise or plan, or to enter into any contract with the insured or with any other person, which plan or contract tends to limit or restrict the freedom of choice in the open market of the person or persons having the legal right of the choice regarding contracts, purchases and arrangements with reference to any part of a funeral service for the insured;
(2)
Provide in the policy or otherwise that the face amount of the policy, or any loss or indemnity, that may accrue under the policy, shall be payable in anything other than legal tender of the United States and of this state to the beneficiary named in the policy or the legal representative of the insured, and any provision to the contrary shall be null and void;
(3)
Enter into any contract with any funeral director, providing that the funeral director shall conduct the funeral of persons insured by the insurance company, fraternal benefit society, or similar company. This subsection (b) shall not be construed to prohibit any beneficiary under a policy from assigning the policy to a funeral establishment of the beneficiary's choice after death of the insured has occurred and liability has accrued; or
(4)
Enter into any contract with any citizens of this state, contracting and agreeing to furnish funeral merchandise or services upon the death of any person insured.
(c)
It is unlawful for any person, firm or corporation to enter into any contract, conditioned to take effect on the death of any person, wherein the person, or the personal representative, heirs or next of kin of the person, is promised any rebate, discount or reduction in price for or on account of funeral merchandise, expenses or services by virtue of the person being issued the policy or certificate, or being designated as beneficiary in the policy, or by virtue of the person entering into the contract or being designated in the policy as the recipient of any such rebate, discount or reduction in price.
(d)
Notwithstanding any other provision of this part, if the insurance company issuing the policy does not offer a funeral trust, or only offers a funeral trust for an additional charge, then the beneficiary or the owner of the policy may irrevocably assign the policy or policy benefits to a funeral establishment; provided, however, that the assignment shall not limit, or be construed as limiting, the ability of the pre-need funeral contract beneficiary or the beneficiary's lawful representative from selecting a different funeral establishment to provide merchandise and services. If a subsequent establishment is designated, then the establishment to which the policy or policy benefits are currently assigned shall, upon written notification, promptly execute any documents necessary to transfer the assignment.
(e)
Nothing in this section shall be construed to prohibit the irrevocable assignment of policy benefits to a trust set up to allow for the distribution of the benefits to the funeral home of the policyholder's choosing.
(f)
No assignment of the rights or benefits under a prearrangement insurance policy shall be valid unless it is done on a form approved by the commissioner.
Amended by 2019 Tenn. Acts, ch. 339,s 1, eff. 5/10/2019.
Acts 2007, ch. 592, § 10; 2008, ch. 1065, § 2; 2009, ch. 279, § 4.