Missouri Senate

House Committee Substitute

All preneed providers shall be registered to conduct business in Missouri and identify a custodian of records and any seller authorized by the provider to sell preneed contracts in connection with the seller. If the applicant is a corporation, each officer, director, manager, or controlling shareholder shall be of good moral character and be eligible for licensure if they were individually applying for licensure. (333.315)

All preneed sellers shall be registered to conduct business in Missouri and identify a custodian of records and any provider that has authorized the seller to designate such person as a provider under a preneed contract. If the applicant is a corporation, each officer, director, manager, or controlling shareholder shall be of good moral character and be eligible for licensure if they were individually applying for licensure. Sellers shall also establish a trust in order to sell trust funded preneed contracts. (333.320)

Preneed agents selling contracts on behalf of a seller shall be at least 18 years old and provide the name and address of each seller for whom the applicant is authorized to sell preneed contracts. (333.325)

The grounds for denial, suspension, and revocation of licenses and registrations are made the same for embalmers, funeral directors, preneed sellers, preneed providers, and preneed agents. Individuals whose license or registration are revoked shall wait three years to reapply. (333.330)

Persons shall not be designated as a preneed provider unless they have a written contractual agreement with the seller stating as such. (436.420)

The act enumerates provisions required to be included in all preneed contracts. (436.425)

In the case of a trust funded contract, sellers shall place at least 95% of the total amount of the contract into the trust. The calculation of the total contract amount shall include the origination fee which may be up to the first 5% which may be retained by the seller. All payments minus any origination fee must be deposited into the trust within 60 days of receipt. After the seller has deposited payments into the trust, the trustee may disburse up to 10% of the total of payments received into the trust on the contract. Payments of two or more contracts may be commingled in the same preneed trust if adequate records are kept. Expenses of establishing and administering the trust may be paid from income generated from the trust. If the income is insufficient to pay such fees, the seller is obligated to pay the fees. Sellers and providers are entitled to all of the income of the trust according to the terms of the contract, less the administration fees, which shall accrue through the life of the trust, the market value of which may be distributed upon termination of the trust. (436.430)

Trustees shall be held to the prudent investor standard and shall diversify the investments in the trust unless the trustee reasonably determines that the purpose of the trust is better served without diversification. (436.435)

Sellers, providers, and preneed agents shall not receive or collect from the purchaser of an insurance funded preneed contract, any amount in excess of what is required to pay the premiums on the insurance policy as assessed or required by the insurer as premium payments for the insurance policy. Sellers shall not collect any fees from the purchaser of an insurance funded preneed contract, other than those fees assessed by the insurer. Term life insurance policies shall not be used to fund a preneed contract unless a purchaser has a preexisting insurance policy and assigns benefits to qualify for public services. Providers, sellers, and agents shall not procure or accept a loan against an insurance contract used to fund a preneed contract. The purchaser or beneficiary shall be the owner of the insurance policy purchased to fund a preneed contract which shall only be valid if the seller or provider is named as the beneficiary or assignee of the policy. If the proceeds of the policy exceed the cost of goods and services provided pursuant to the contract, any overage shall be paid to the estate of the beneficiary or to the state if the beneficiary received public assistance. (436.450)

Sellers and purchasers may agree to use a joint account to fund the contract. A separate joint account shall be established for each preneed contract. All payments shall be deposited in the account within 10 days of receipt of the payment by the seller. Financial institutions shall not invest the funds of the account in term life insurance or any investment that does not reasonably have the potential to gain income. (436.455)

Purchasers may cancel a revocable contract any time without cause. In the case of a joint account funded contract, all deposited funds shall be returned to the purchaser and interest shall be distributed as provided in the agreement between the seller and purchaser. In the case of a trust funded contract, all of the trust property including any percentage allowed to be withdrawn but excluding interest, shall be returned to the purchaser. The insurance contract shall determine distribution in the case of an insurance funded contract. (436.456)

Sellers may cancel a trust funded or joint account funded contract if the purchaser is in default for over 60 days. Purchasers may remit payments in arrears if te seller chooses not to cancel the contract. If the purchaser fails to remit payments, the seller may cancel the contract or continue the contract where the purchaser will receive full credit for all payments the purchaser has made. Upon cancellation, 80% of the contract payments shall be refunded to the purchaser. (436.457)

Purchasers may select a different provider and shall not be assessed any fee for doing so. In such cases, the seller has the option of continuing the trust or transfering the funds to another preneed trust as designated by the new provider. (436.458)

Sellers shall file annual reports with the board that includes various information relating to the types of contracts they are holding and the details relating to the trusts and joint accounts holding assets for the contracts and the insurance contracts used to fund the contracts. (436.460)

The board shall have the authority to conduct random inspections, investigations, and audits of preneed providers, sellers and agents, and trust and joint accounts holding assets to fund preneed contracts. Financial examinations shall be conducted at least once every five years. The Attorney General shall have concurrent jurisdiction in conducting inspections, investigations, and audits. (436.470)

Those who knowingly and willfully violate any of the aforementioned provisions is guilty of a class C felony. (436.485)

Providers and sellers who cease to do business shall notify the board and certain providers, sellers, and purchasers that it is doing so. (436.490, 436.500)

Preneed contracts may offer the purchaser the option to acquire and maintain credit life insurance on the life of the purchaser to provide for the payment of death benefits to the seller in an amount equal to the total of all contract payments unpaid as of the date of the purchaser's death. (436.505)

CHRIS HOGERTY