You must deposit 100 percent of the money you receive under the Prepaid Funeral Service Contract in escrow with an authorized Escrow Agent or the purchaser may make payments to an insurer to fund the contract with a life insurance policy.
- Escrow Agent must invest the funds in one or more of the specific types of investment authorized under the Pre-need Law.
- Funeral director cannot be the beneficiary of any of these investments.
- Consumer’s deposit cannot be used to pay a premium or commission; rather the entire deposit must benefit the consumer.
- A contract that is transferred to another funeral home must not have more than a 5 percent penalty, unless the contract is funded by a life insurance policy, in which case no penalty may be taken.
- The value of the escrow fund cannot be diminished by a penalty if it is cancelled.
- If Prepaid Funeral Service Contract is cancelled, the contract purchaser is entitled to receive a refund of all money paid under the contract together with all accrued income minus the costs actually and reasonably incurred by the funeral home in performing the contract.
If the Prepaid Funeral Service Contract is funded with a life insurance policy, cancellation of the Prepaid Funeral Service Contract does not cancel the life insurance policy. The life insurance policy may only be cancelled under the policy language. If the life insurance policy is cancelled, the cash surrender value of the life insurance policy will be returned.