Florida Regulations 69K-8.005: Preneed Contracts Funded by Life Insurance
Current as of: 2024 | Check for updates
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(1) A preneed contract may be funded by a life insurance policy payable upon death of the preneed contract beneficiary, provided that no such policy may be sold if its maturity value is less than the amount of the services, merchandise or burial rights to be provided under the preneed contract. For purposes of this rule, maturity value shall mean the amount payable on the policy when all premiums for the policy have been paid, or all conditions for full payment of the policy amount have been met, and must at least equal the cost to the preneed purchaser of the services, merchandise, or burial rights established at the time the preneed contract is executed.
(2) Preneed contracts funded by life insurance may be sold only by persons holding a valid preneed license pursuant to Florida Statutes § 497.452
(3) Any insurance policy used to fund a preneed contract must be sold in a manner that complies with Florida Statutes § 626.785
(4) All preneed contracts funded by insurance must meet the requirements of Florida Statutes § 497.282, and with regard to Florida Statutes § 497.282(8), the contract must contain the following provisions:
(a) Disclosure of the purchase price, itemized to reflect the specific costs allocated to each service, cash advance or merchandise purchased. Where applicable, merchandise specifications shall be included;
(b) Disclosure that a life insurance policy has been purchased to fund the monies needed for some or all of the purchase price and will be used to fund the contract at the time of the purchaser’s death in one of the following ways:
1. The life insurance policy proceeds will constitute the full payment for the contract purchase price at purchaser’s death; or
2. Where the insurance will constitute only a portion of the full payment for the purchase price at purchaser’s death, the contract shall clearly disclose that the purchaser has an obligation to pay the difference between the proceeds of the life insurance and the purchase price of the prearranged funeral.
(c) A clear disclosure that no funds are being paid into trust under the preneed contract and that the funding of the contract is through the payment of premiums to purchase life insurance;
(d) What penalties will occur in the event purchaser fails to make premium payments on the funding insurance policy;
(e) A clear disclosure of the impact upon the preneed contract and any penalty to be incurred or monies to be received as a result of cancellation or surrender of the life insurance policy;
(f) That all purchasers are entitled to terminate or cancel their preneed contract at any time and that all purchasers are entitled to terminate or cancel the funding insurance policy within 30 days of purchase and receive a full refund of all monies paid for the contract or funding insurance policy;
(g) The following statement in bold print: The Board of Funeral, Cemetery, and Consumer Services regulates preneed contracts in Florida. Should you have a complaint, you should contact the Board at the Division of Funeral, Cemetery, and Services, 200 East Gaines Street, Tallahassee, Florida 32399-0361 or by calling 1(800)323-2627.
(5) All preneed contracts shall be sequentially prenumbered.
(6) Each preneed licensee shall identify all insurance products currently used in connection with the sale of its preneed contracts. Such identification shall be provided in list format to be kept on file at the Board office. The identification shall include the following information for each insurance product listed:
(a) Name and address of insurer;
(b) Form number of master insurance policy;
(c) Form number of any accompanying endorsements, riders, and application forms.
(d) Evidence of approval by the Florida Office of Insurance Regulation.
(7) The Board may request for reference purposes a sample copy of any insurance policy or accompanying forms it does not currently have on file.
Rulemaking Authority 497.103 FS. Law Implemented 497.282, 497.451, 497.452, 497.454 FS. History-New 2-15-96, Formerly 3F-8.005.
Terms Used In Florida Regulations 69K-8.005
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
- Contract: A legal written agreement that becomes binding when signed.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
(3) Any insurance policy used to fund a preneed contract must be sold in a manner that complies with Florida Statutes § 626.785
(4) All preneed contracts funded by insurance must meet the requirements of Florida Statutes § 497.282, and with regard to Florida Statutes § 497.282(8), the contract must contain the following provisions:
(a) Disclosure of the purchase price, itemized to reflect the specific costs allocated to each service, cash advance or merchandise purchased. Where applicable, merchandise specifications shall be included;
(b) Disclosure that a life insurance policy has been purchased to fund the monies needed for some or all of the purchase price and will be used to fund the contract at the time of the purchaser’s death in one of the following ways:
1. The life insurance policy proceeds will constitute the full payment for the contract purchase price at purchaser’s death; or
2. Where the insurance will constitute only a portion of the full payment for the purchase price at purchaser’s death, the contract shall clearly disclose that the purchaser has an obligation to pay the difference between the proceeds of the life insurance and the purchase price of the prearranged funeral.
(c) A clear disclosure that no funds are being paid into trust under the preneed contract and that the funding of the contract is through the payment of premiums to purchase life insurance;
(d) What penalties will occur in the event purchaser fails to make premium payments on the funding insurance policy;
(e) A clear disclosure of the impact upon the preneed contract and any penalty to be incurred or monies to be received as a result of cancellation or surrender of the life insurance policy;
(f) That all purchasers are entitled to terminate or cancel their preneed contract at any time and that all purchasers are entitled to terminate or cancel the funding insurance policy within 30 days of purchase and receive a full refund of all monies paid for the contract or funding insurance policy;
(g) The following statement in bold print: The Board of Funeral, Cemetery, and Consumer Services regulates preneed contracts in Florida. Should you have a complaint, you should contact the Board at the Division of Funeral, Cemetery, and Services, 200 East Gaines Street, Tallahassee, Florida 32399-0361 or by calling 1(800)323-2627.
(5) All preneed contracts shall be sequentially prenumbered.
(6) Each preneed licensee shall identify all insurance products currently used in connection with the sale of its preneed contracts. Such identification shall be provided in list format to be kept on file at the Board office. The identification shall include the following information for each insurance product listed:
(a) Name and address of insurer;
(b) Form number of master insurance policy;
(c) Form number of any accompanying endorsements, riders, and application forms.
(d) Evidence of approval by the Florida Office of Insurance Regulation.
(7) The Board may request for reference purposes a sample copy of any insurance policy or accompanying forms it does not currently have on file.
Rulemaking Authority 497.103 FS. Law Implemented 497.282, 497.451, 497.452, 497.454 FS. History-New 2-15-96, Formerly 3F-8.005.