Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 12 - Trade Practices and Frauds › Section 806 KAR 12:131 - Requirements for disclosure for life insurance and annuity contracts used to fund preneed funeral contracts or prearrangements

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.12-020,
				304.12-240
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.2-110 authorizes the Executive Director
				of Insurance to adopt administrative regulations necessary for or as an aid to
				the effectuation of any provision of the Kentucky Insurance Code. This
				administrative regulation establishes disclosure requirements for life
				insurance or annuity contracts which are used to fund preneed funeral contracts
				or prearrangements.
Section 1.
			 Definitions. As used in this administrative regulation: "Preneed funeral
			 contract or pre-arrangement" shall have the meaning set forth in
			 KRS
			 304.12-240.
Section 2. Required Disclosure. If a life
			 insurance or annuity contract is to be used to fund a preneed funeral contract
			 or prearrangement, the following information shall be disclosed adequately when
			 an application is made for such life insurance or annuity contract prior to
			 acceptance of the applicant's initial premium or deposit:
(1) The fact that a life insurance or annuity
			 contract is involved or is being used to fund a preneed funeral contract or
			 prearrangement;
(2) 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;
(3) The relationship of the
			 life insurance or annuity contract to the funding of the preneed funeral
			 contract or prearrangement and the nature and existence of any guarantees
			 relating to the preneed funeral contract or prearrangement;
(4) The impact on the prearrangement of:
(a) Changes in the life insurance policy,
			 including, but not limited to, changes in the assignment, beneficiary
			 designation, or use of the proceeds;
(b) Penalties to be incurred by the contract
			 holder as a result of failure to make premium payments; and
(c) Penalties to be incurred or monies to be
			 received as a result of cancellation or surrender of the life insurance or
			 annuity contract;
(5) A
			 list of the merchandise and services which are applied or contracted for in the
			 preneed funeral contract or 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;
(6) An
			 explanation of any entitlements or obligations which arise if there is a
			 difference between the proceeds of the life insurance or annuity contract and
			 the amount actually needed to fund the preneed funeral contract or
			 prearrangement; and
(7) Any
			 penalties or restrictions, regarding either geographic restrictions or
			 constraints or the inability of the provider of funeral goods or services to
			 perform, on the delivery of merchandise, services, or the prearrangement
			 guarantee.