Missouri Senate

Introduced

All preneed providers shall be registered to conduct business in Missouri, have obtained a high school diploma, be of good moral character, and identify a custodian of records and any seller authorized by the provider to sell preneed contracts in connection with the seller. (Section 333.315)

All preneed sellers shall be registered to conduct business in Missouri, have obtained a high school diploma, be of good moral character, 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. Sellers shall also establish a trust in order to sell trust funded preneed contracts. (Section 333.320)

Preneed agents selling contracts on behalf of a seller shall be of good moral character, have obtained a high school diploma, and have successfully passed a Missouri law examination. (Section 333.325)

Persons shall not be designated as a preneed provider unless they have a written contractual agreement with the seller stating as such. (Section 436.415)

The act enumerates provisions required to be included in all preneed contracts including the following:

• The name, address and phone number of the purchaser, beneficiary, provider and seller;

• The name, address, phone and license number of the provider and the seller;

• Set out in detail the disposition, funeral and burial services and facilities, and merchandise requested;

• Identify whether the contract is trust funded, insurance funded, or joint account funded;

• Include notice that the cancellation of the contract shall not cancel any life insurance funding the contract, and that insurance cancellation is required to be made in writing to the insurer;

• Include notice that the purchaser will only receive the cash surrender value of any insurance policy funding the contract if cancelled after a designated time, which may be less than the amount paid into the policy;

• Include notice that the purchaser has the right to transfer the provider designation to another provider;

• Prominently identify whether the contract is revocable or irrevocable;

• Set forth the terms for cancellation by the purchaser or by the seller;

• Identify any preneed trust or joint account into which contract payments shall be deposited, including the name and address of the corresponding trustee or financial institution;

• Include the name, address and phone number of any insurance company issuing an insurance policy used to fund the preneed contract;

• Include the name and signature of the purchaser, the preneed agent responsible for the sale of the contract, and the seller or its authorized representative; and

• Prominently identify whether the contract is a guaranteed or non-guaranteed contract in a recognizable font (Section 436.425)

Sellers who sell trust funded contracts shall deposit 100% of the payments into the trust withing 60 days of receipt of the funds from the purchaser. 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 the trust. Sellers are entitled to all of the income of the trust which shall accrue through the life of the trust only to be distributed upon termination of the trust. (Section 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. (Section 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 and providers, sellers, and agents shall not procure or accept a loan against an insurance contract used to fund a preneed contract. (Section 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 5 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 principal and income, shall be returned to the purchaser. The insurance contract shall determine distribution in the case of an insurance funded contract. (Section 436.456)

Sellers may cancel the contract if the purchaser is in default for 60 days. Purchasers may remit payments in arrears if te seller chooses not to cancel the contract. If the seller does not cancel and the purchaser does not remit payments, the seller shall credit the purchaser's preneed payments toward any at-need costs. Upon cancellation, 80% of the contract payments shall be refunded to the purchaser. (Section 436.457)

Purchasers may select an different provider and shall not be assessed any fee for doing so. (Section 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. (Section 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. (Section 436.470)

Those who knowingly and willfully violate any of the aforementioned provisions is guilty of a Class C felony. (Section 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. (Section 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. (Section 436.505)

CHRIS HOGERTY