Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-3-003 - PRENEED CONTRACTS AND CERTIFICATES OF AUTHORITY › Section 482-3-003-.06 - Preneed Contract - Minimum Requirements - Funeral Providers

Current through Register Vol. 42, No. 9, June 28, 2024
(1) On or after
			 January 1, 2015, a preneed contract for funeral merchandise and services must
			 have, at a minimum, the following required disclosures:
(a) A thirty (30) day refund provision in the
			 event of a cancellation. In the event of a cancellation prior to thirty (30)
			 days the purchaser shall be entitled to a complete refund of the amount paid.
			 In the event of a cancellation after the expiration of the thirty (30) days,
			 the seller shall be entitled to a cancellation fee not to exceed twenty percent
			 (20%) of the purchase price collected, and the balance of payments exceeding
			 twenty percent (20%) shall be refunded to purchaser. If the contract is funded
			 by life insurance or an annuity, any cancellation after thirty (30) days will
			 entitle the purchaser to be paid the cash value of the life insurance policy or
			 annuity contract or other refunds per the terms of the policy unless the
			 purchaser elects to maintain the life insurance policy or annuity contract by
			 continuing payment of premiums to the issuing insurance company.
(b) An acknowledgement from the purchaser
			 that purchaser has reviewed a current general price list, casket price list,
			 and outer burial container price list prior to signing the contract.
(c) A disclosure as to which method of
			 funding the seller is using to fund the preneed contract. Regardless of the
			 method of preneed contract funding, the disclosure should include language to
			 the effect that if the purchaser has not completed all required payments
			 according to the contract terms when the contract becomes at need then the
			 difference between the preneed contract price and the funds available is due
			 and payable to the provider. In the event that individual or group life
			 insurance funding is being used as an alternative to a trust, the disclosure
			 must comply with the provisions of Rule
			 482-3-004-.11. In the event that
			 the trustee is purchasing life insurance on the contract purchaser or
			 beneficiary, written consent must be made through a document separate from the
			 preneed contract under Rule
			 482-3-004-.12.
(d) An explanation that an "irrevocable
			 option" provision in the contract, when signed by the purchaser, is used when
			 the purchaser is a recipient of or is seeking to qualify for public assistance
			 for such programs as Medicaid and Supplemental Security Income. The purchaser
			 must acknowledge that the purchaser is aware that the contract is revocable
			 unless and until the "irrevocable option" is signed. The purchaser must further
			 acknowledge that an "irrevocable option" is not required to be signed in order
			 to execute the contract.
(e) In the
			 event the contract contains a transfer provision, the seller shall be entitled
			 to a reasonable fee for a transfer. The "reasonable fee" shall be no more than
			 the cancellation fee allowed under (a) of this subsection.
(f) An acknowledgment by purchaser that cash
			 advance item(s) not guaranteed at the listed contract price are clearly denoted
			 as subject to change and the difference is due, if any, at the time of contract
			 fulfillment.
(g) Provision in the
			 event of a purchaser default. After ninety (90) days or more past due, seller
			 must give thirty (30) days written notice to purchaser to cure any default. At
			 the expiration of thirty (30) days, seller shall be entitled to cancel the
			 contract and withdraw funds in trust. The seller shall refund to purchaser the
			 amount collected less a"reasonable fee" of no more than the cancellation fee
			 under (a) of this subsection.
(h)
			 Breach of contract provision where the purchaser shall be entitled to a refund
			 of 100 percent of all money paid on the contract in the event of a breach of
			 contract by the seller.
(i) If the
			 seller's practice is to install vaults or outer burial containers before need,
			 the additional provisions described in Rule
			 482-3-003-.08.
(j) If merchandise and services are to be
			 provided as complimentary or free of charge, such merchandise and services must
			 be itemized on the preneed contract and noted as "no charge."