Section 0780-05-10-.13 - PRE-NEED CONTRACT PROVISIONS(1) No contract seller shall use a pre-need contract form unless the contract seller has submitted the form to the Commissioner, and the Commissioner has approved the form.(2) Every pre-need contract shall contain, at a minimum, the following: (a) a statement as to whether the contract establishes a revocable trust account or an irrevocable trust account; 1. if such trust account is revocable, a statement that the purchaser of the merchandise and/or services under the contract shall be entitled to receive any or all of the payments made and any earnings or interest thereon upon demand on the trustee prior to the death of the contract beneficiary;2. if such trust account is irrevocable, the contract shall state on its face and in boldface type and all uppercase letters the following: "The trust account established by this contract is irrevocable, and the funds paid hereunder are not refundable. Accumulated trust principal and interest are freely transferable to satisfy funeral expenses at any licensed funeral establishment as provided by law."
(b) a clear disclosure as to whether the funds identified as having been paid or are to be paid: 1. are to be applied to the price of funeral merchandise and services to be selected by a designated person at the time of death of the person for whom the funds were paid. In the event this condition applies, the contract shall state on its face in boldface type and uppercase letters, the following: "_________________________if the amount in the
(Purchaser's Signature)
trust account exceeds the prevailing price (at the time of selection) of the funeral merchandise and services selected, the balance remaining shall be refunded to
_________________________________________________________
(Name)."
2. fully pay for the funeral merchandise and services (or their equivalent) identified therein; or3. fully pay for the funeral merchandise and services (or their equivalent) identified therein, if and only if the prevailing price thereof at the time of the death of the contract beneficiary does not exceed the amount in the trust account at that time.(c) a means whereby the purchaser can indicate his or her choice of either paying or not paying any applicable sales or use tax for the related merchandise or services at the time the contract is entered into;(d) a complete disclosure of the pricing arrangement and of any contingent liabilities or costs of the buyer;(e) a disclosure that, upon the death of the contract beneficiary, the trustee shall release an amount equal to the agreed purchase price to the contract seller upon proof of death of the contract beneficiary and verification that all of the terms of the pre-need contract have been fully performed by the contract seller;(f) a disclosure that the trustee shall pay any balance remaining in the trust fund after payment for the funeral merchandise and services in accordance with the pre-need contract: 1. to the contract buyer or his estate, if such merchandise and services are itemized in the contract; or2. to the person designated by the contract buyer in the boldface disclosure required by part (2)(b)1. of this rule, if selection of such merchandise and services is deferred until the death of the contract beneficiary.(g) a disclosure that the contract, books, records and accounts pertaining to the contract buyer's contract shall be available for inspection by the contract buyer at the contract seller's place of business during normal working hours;(h) a disclosure of the identity and address of the trustee for the purchaser's funds and that notification to purchasers need not be made upon change of trustees so long as this information is available upon request; and(i) a disclosure that if the buyer and seller agree upon a reasonable fee for the trustee, such fee will be paid in the manner prescribed by these rules.(3) No pre-need contract form shall contain:(a) a provision specifying any particular investment of trust funds; or(b) any provision not in compliance with Tenn. Code Ann. Title 62, Chapter 5, Part 4, or any of these rules.(4) The contract seller shall give to the contract buyer a copy of the pre-need contract, and any amendment thereto, at the time of its execution.(5) No approval of a pre-need contract form by the Commissioner shall be used for advertising or promotional purposes.(6) As soon as possible after the submission of a proposed pre-need contract form pursuant to this rule, the Commissioner shall approve or disapprove the form in writing; provided, however, that a preneed contract form shall be deemed approved unless disapproved within sixty (60) days after its receipt. In the event that the Commissioner disapproves a preneed contract form, the Commissioner shall specify in what respect such form does not meet the requirements of law.Tenn. Comp. R. & Regs. 0780-05-10-.13
Original rule filed October 22, 2002; effective January 5, 2003.Authority: T.C.A. §§ 62-5-403 and 62-5-405(a) and (b).