69O-148.001. Funding of Preneed Contracts With Life Insurance or Annuities

(1) Background and Purpose. The provisions of section 626.785, F.S., provide for insurance agents to sell life insurance and annuities on a limited basis to fund preneed services and merchandise. The statute provides that if a funeral establishment contracts with a life insurance agent to sell a preneed contract pursuant to chapter 497, F.S., the benefits payable under the insurance contract are limited to the approximate retail price of the funeral service and merchandise. The purpose of this rule is to clarify the statutory limitations to ensure that consumers are protected.

(2) General Limitation. For purposes of section 626.785, F.S., and this rule only, and pursuant to section 624.602, F.S., the transaction of life insurance shall include the sale of nonvariable type annuities.

(3) Limitation of License. An agent licensed pursuant to section 626.785(3), F.S., is limited to selling life insurance and nonvariable type annuity contracts for the purpose of providing funds to pay for funeral services and merchandise selected under the terms of a preneed funeral contract.

(4) “Face Amount” Defined. For purposes of section 626.785, F.S., and this rule, the term face amount shall, provided that any subsequent increase in the benefit payable under the life insurance policy or annuity does not exceed the reasonably expected increase in the retail price of the services and merchandise specified in the preneed funeral contract, mean:

(a) The total consideration for an annuity contract; or

(b) As to a life insurance policy with full first day coverage, the death benefit payable at the time the policy is issued; or

(c) As to a life insurance policy which has a limited death benefit in the early years, the death benefit designated at the time the policy is issued which is payable when the limited benefits are inapplicable.

(5) Limitation of Coverage.

(a) Life insurance or nonvariable type annuity contracts may be sold to cover the cost of services and merchandise specified in a preneed funeral contract of an insured or annuitant, provided the face amount of the life insurance policy, or the total consideration paid for such annuity, does not exceed the amount set forth in section 626.785, F.S. Any increase in the death benefit of such life insurance or annuity shall be limited to the reasonably anticipated increase in the retail price of the services and merchandise specified in the preneed funeral contract.

(b) The aggregate amount of insurance proceeds payable under such life insurance or annuity contracts, for the benefit of any one life which may be paid to a preneed certificate holder licensed pursuant to chapter 497, F.S., shall not exceed the retail price of the services and merchandise which are provided at time of need. All other proceeds shall be paid to the beneficiary named in such contracts, or, if no beneficiary has been designated, to the estate of the insured or annuitant.

(c) All annuity contracts shall contain an age or event whereby the annuitant shall start receiving annuity benefits. If the maturity date of the annuity contract is age 70 or greater, or upon the death of the annuitant, the annuity contract must permit the contract owner the option to change the maturity date at the owner’s option.

(6) Form Filing Notification. Any form filed with the Office pursuant to section 627.410, F.S., for use in funding a preneed funeral contract in this State, shall include a notification of the form’s intended use for this purpose.

Rulemaking Authority 624.308(1) FS. Law Implemented 624.307(1), 626.785, 626.9541(1)(a), (t), 627.410 FS. History–New 4-8-97, Formerly 4-148.001, Amended 1-18-15.