(3) the purchaser's inability to change the selected
funeral goods and services during the life of the contract unless
the contract is voided and replaced with a new contract;
(4) the extent to and conditions under which the purchaser
may change the provider specified in the contract or, with respect
to a trust-funded contract, the contract beneficiary;
(5) whether the purchaser may incur tax liability for
earnings under a trust-funded contract or for growth under an insurance
policy if the contract is insurance-funded;
(6) the extent to which you offer any warranties or
guarantees or assert any specific disclaimers of warranty;
(7) the prohibition on partial cancellation of or loans
against the contract;
(8) if the transaction may result in available funds
in excess of the contract price at the time the funeral is performed,
identification of who is entitled to such excess funds;
(9) each party's general contractual duties under the
contract and the extent to which the contract is binding on a person
who assumes the rights or obligations of a party to the contract;
(10) the manner in which a party must notify other
parties of a change of address; and
(11) if the contract is insurance-funded, the requirement
that terms of the insurance policy must be consulted for information
concerning the obligations of the insurance company and those of the
policy owner.
(f) Cancellation or assignment. Your proposed prepaid
funeral benefits contract must recognize and explain:
(1) with respect to a trust-funded contract:
(A) the manner in and conditions under which the purchaser
may cancel the contract, including the procedural requirements applicable
to a cancellation, including the purchaser's obligation to request
cancellation in writing on department-approved forms and your obligation
to pay a refund not later than the 30th day after receipt of the purchaser's
written cancellation notice;
(B) the amount of the refund or other payment that
you will owe the purchaser if the contract is canceled and the conditions
or circumstances that may alter the refund amount; and
(C) the refund or other benefits you will owe the purchaser
if the contract is canceled at your request; or
(2) subject to modifications or clarifications required
by §25.2(a)(2) of this title (Relating to Am I Required to Use
the Model Contract and Model Waiver), with respect to an insurance-funded
contract:
(A) the purchaser's right to assign the purchaser's
interest in an insurance policy by signing a separate document;
(B) the qualification that canceling the contract does
not automatically cancel the insurance policy but canceling the insurance
policy does cancel the contract;
(C) the procedural requirements applicable to a cancellation
of the contract, including the purchaser's obligation to request cancellation
in writing on department-approved forms and the statutory obligation,
if applicable, to pay a refund not later than the 30th day after receipt
of the purchaser's written cancellation notice;
(D) the purchaser's obligation to read the insurance
policy to determine the conditions imposed upon cancellation and the
potential amount of refund that would be due if the policy is canceled
during or after the "free look" period;
(E) notice and acknowledgement by the purchaser that
if the insurance policy is cancelled at the purchaser's request, the
surrender value may be significantly less than the premiums the purchaser
paid. The disclosure must appear in the cancellation section exactly
as set out in the model contract and in the following figure, without
modification, including substantially the same formatting and spacing:
Attached Graphic
(F) the consequences the purchaser may expect, whether
refund of premium, receipt of cash surrender value, or other benefits
from you or another person, if the contract is canceled at your request;
and
(G) the effect that loans against or withdrawal of
proceeds accrued under an insurance policy will have on the contract
and on price guaranties in the contract.
(g) Default. Your proposed prepaid funeral benefits
contract must explain events and consequences of default under the
contract and under each insurance policy if the contract is insurance-funded,
including:
(1) the potential effect on the contract if the purchaser
fails to make a payment or makes a late payment under the contract
or under an insurance policy if the contract is insurance-funded;
(2) the effect on the contract and on payments due
if the contract beneficiary dies:
(A) before the purchaser's payment obligations have
been fulfilled under a trust-funded contract; or
(B) if the contract is insurance-funded:
(i) during a period when an insurance policy pays reduced
benefits, if applicable; or
(ii) before the premium obligations have been fulfilled
on an insurance policy, if applicable;
(3) the conditions under which you may owe a full or
partial refund to the purchaser of funds received under a contract,
or a full or partial abandonment of your rights to anticipated proceeds
of an insurance policy if the contract is insurance-funded and proceeds
are not yet received, as a consequence of your inability (or the provider's
inability, if you are relying on another to perform portions of the
contract) to furnish the selected funeral goods and services; and
(4) a statement that the Prepaid Funeral Guaranty Fund
guarantees performance of the prepaid funeral seller and the designated
funeral provider, as well as associated administrative functions required
by law.
(h) Changes to disposition or funeral goods and services
at the death of contract beneficiary. Your proposed prepaid funeral
benefits contract must disclose the circumstances under which the
contract may be modified by the responsible person at the death of
the contract beneficiary, as required by Finance Code, §154.151(e).
The disclosure must appear exactly as set out in the model contract
and in the following figure, without modification, except that the
phrase "fully funded" may be substituted for the phrase "fully paid"
wherever it appears in this disclosure when used in an insurance-funded
contract. In addition, you may use a larger type size if feasible.
Attached Graphic
(i) Payment terms. Your proposed prepaid funeral benefits
contract must clearly state and explain payment terms and related
provisions, including:
(1) how and when you will deposit a payment received
under a trust-funded contract, or forward any premiums received to
the insurance company for application to an insurance policy if the
contract is insurance-funded;
(2) with respect to a trust-funded contract, whether
and the extent to which you will retain a portion of the purchaser's
payments for reimbursement of your operating and selling expenses;
(3) with respect to a trust-funded contract, the finance
charges you will impose, if applicable, provided that the description
must also comply with Finance Code, Chapter 345, and other state and
federal law governing such charges;
(4) subject to modifications or clarifications required
by §25.2(a)(2) of this title, with respect to an insurance-funded
contract:
(A) the effect on the contract if insurance coverage
is denied and that all premiums will be returned to the policy owner;
(B) if payment terms under the insurance policy are
not disclosed in the contract, a space for the purchaser to initial
or sign to acknowledge that the purchaser has received written information
regarding the terms governing premium payments in another document
that the purchaser received at the time of sale, such as the application
for insurance or the insurance policy;
(C) if the information the purchaser receives regarding
payment terms under an insurance policy is based on an estimate of
premiums, that must be noted;
(D) notice and acknowledgement by the purchaser that
insurance premiums paid on the insurance policy or policies may be
more or less than the total contract price, and an estimate for total
premiums to be paid. The disclosure must appear in the payment terms
section exactly as set out in the model contract and in the following
figure, without modification, including substantially the same formatting
and spacing:
Attached Graphic
Cont'd... |