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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB2364
Introduced 2/14/2008, by Sen. Pamela J. Althoff SYNOPSIS AS INTRODUCED: |
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225 ILCS 45/1a |
from Ch. 111 1/2, par. 73.101a |
225 ILCS 45/1a-1 |
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225 ILCS 45/1a-2 new |
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225 ILCS 45/1b |
from Ch. 111 1/2, par. 73.101b |
30 ILCS 105/5.708 new |
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Amends the Illinois Funeral or Burial Funds Act. Removes references to finance charges from the definition of "sales proceeds" and "purchase price". Allows a purchaser to cancel a pre-need contract within 30 days after all parties have signed the contract and receive 100% of all payments made under the contract. Creates the Pre-need Funeral Contract Guarantee Fund, into which $5 from each pre-need contract sold by a licensee under the Act shall be deposited. Provides that the Fund shall be used by the Comptroller to pay restitution to purchasers who are unable to receive the benefits of a pre-need contract or to receive the funds due by reason of cancellation of a pre-need contract. Removes an exception that allows a trustee to be the seller or provider of funeral services or merchandise. Makes other changes. Amends the State Finance Act to establish the new Fund.
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A BILL FOR
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| AN ACT concerning regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Funeral or Burial Funds Act is |
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| amended by changing Sections 1a, 1a-1, and 1b and by adding |
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| Section 1a-2 as follows:
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| (225 ILCS 45/1a) (from Ch. 111 1/2, par. 73.101a)
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| Sec. 1a. For the purposes of this Act, the following terms |
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| shall have
the meanings specified, unless the context clearly |
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| requires another meaning:
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| "Beneficiary" means the person specified in the pre-need |
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| contract upon
whose death funeral services or merchandise shall |
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| be provided or delivered.
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| "Licensee" means a seller of a pre-need contract who has
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| been licensed by
the Comptroller under this Act.
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| "Outer burial container" means any container made of |
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| concrete,
steel, wood, fiberglass or similar material, used |
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| solely at the interment
site, and designed and used exclusively |
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| to surround or enclose a separate
casket and to support the |
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| earth above such casket, commonly known as a
burial vault, |
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| grave box or grave liner, but not including a lawn
crypt as |
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| defined in the Illinois Pre-need Cemetery Sales Act.
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| "Parent company" means a corporation owning more than 12 |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| cemeteries or
funeral homes in more than one state.
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| "Person" means any person, partnership, association, |
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| corporation, or
other entity.
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| "Pre-need contract" means any agreement or contract, or any |
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| series or
combination of agreements or contracts, whether |
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| funded by trust deposits or
life insurance policies or |
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| annuities, which has for a purpose the furnishing
or |
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| performance of funeral services or the furnishing or delivery |
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| of any
personal property, merchandise, or services of any |
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| nature in connection with
the final disposition of a dead human |
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| body. Nothing in this Act is intended to
regulate the content |
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| of a life insurance policy or a tax-deferred annuity.
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| "Provider" means a person who is obligated for furnishing |
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| or performing
funeral services or the furnishing or delivery of |
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| any personal property,
merchandise, or services of any nature |
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| in connection with the final disposition
of a dead human body.
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| "Purchaser" means the person who originally paid the money |
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| under or in
connection with a pre-need contract.
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| "Sales proceeds" means the entire amount paid to a seller, |
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| exclusive
of sales taxes paid by the seller, finance charges |
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| paid by the purchaser, and
credit life, accident or disability |
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| insurance premiums, upon any agreement or
contract, or series |
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| or combination of agreements or contracts, for the purpose
of |
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| performing funeral services or furnishing personal property, |
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| merchandise, or
services of any nature in connection with the |
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| final disposition of a dead human
body, including, but not |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| limited to, the retail price paid for such services
and |
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| personal property and merchandise.
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| "Purchase price" means sales proceeds less finance charges |
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| on
retail
installment contracts .
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| "Seller" means the person who sells or
offers to sell the |
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| pre-need contract
to a purchaser, whether funded by a trust |
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| agreement, life insurance policy,
or tax-deferred annuity.
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| "Trustee" means a person authorized to hold funds under |
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| this Act.
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| (Source: P.A. 92-419, eff. 1-1-02.)
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| (225 ILCS 45/1a-1)
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| Sec. 1a-1. Pre-need contracts.
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| (a) It shall be unlawful for any seller doing business
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| within
this State to accept sales proceeds from a purchaser, |
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| either directly or
indirectly by any means, unless the seller |
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| enters into a
pre-need contract
with the purchaser which meets |
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| the following requirements:
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| (1) It states the name and address of the principal |
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| office of the
seller and the parent company of the
seller, |
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| if
any.
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| (2) It clearly identifies the provider's name and
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| address,
the purchaser, and
the beneficiary, if other than |
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| the purchaser.
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| (2.5) If the provider has branch locations, the |
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| contract
gives the purchaser the opportunity to identify |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| the branch
at which the funeral will be provided.
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| (3) It contains a complete description of the funeral |
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| merchandise and
services to be provided and the price of |
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| the merchandise and services, and it
clearly discloses |
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| whether the price of the merchandise and services is
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| guaranteed or not guaranteed as to price.
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| (A) Each guaranteed price contract shall contain |
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| the following
statement in 12 point bold type:
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| THIS CONTRACT GUARANTEES THE BENEFICIARY THE |
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| SPECIFIC GOODS AND
SERVICES CONTRACTED FOR. NO |
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| ADDITIONAL CHARGES MAY BE REQUIRED.
FOR DESIGNATED |
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| GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED |
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| FOR
UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO, |
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| CASH ADVANCES, SHIPPING OF
REMAINS FROM A DISTANT |
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| PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY
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| SURVIVORS.
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| (B) Except as provided in subparagraph (C) of this |
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| paragraph (3),
each non-guaranteed price contract |
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| shall contain the following
statement in 12 point bold |
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| type:
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| THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE |
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| BENEFICIARY WILL PAY FOR
ANY SPECIFIC GOODS OR |
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| SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A
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| DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE |
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| GOODS OR SERVICES
CONTRACTED FOR. ADDITIONAL CHARGES |
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| MAY BE REQUIRED.
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| (C) If a non-guaranteed price contract may
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| subsequently become guaranteed, the contract shall |
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| clearly
disclose the nature of the guarantee and the |
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| time,
occurrence, or event upon which the contract |
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| shall become a
guaranteed price contract.
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| (4) It provides that if the particular supplies and |
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| services specified
in the pre-need contract are |
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| unavailable at the time of delivery, the provider
shall be |
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| required to furnish supplies and services similar in style |
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| and at
least equal in quality of material and workmanship.
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| (5) It discloses any penalties or restrictions, |
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| including
but not limited
to geographic restrictions or the |
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| inability of the provider
to
perform, on the delivery of |
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| merchandise, services, or pre-need contract
guarantees.
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| (6) Regardless of the method of funding the pre-need |
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| contract, the
following must be disclosed:
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| (A) Whether the pre-need contract is to be funded |
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| by a trust, life
insurance, or an annuity;
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| (B) The nature of the relationship among the person
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| funding the
pre-need contract, the provider, and the
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| seller; and
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| (C) The impact on the pre-need contract of (i) any |
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| changes in the
funding arrangement including but not |
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| limited to changes in the assignment,
beneficiary |
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| designation, or use of the funds; (ii) any specific |
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| penalties
to be incurred
by the contract purchaser as a |
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LRB095 19535 RAS 46148 b |
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| result of failure to make payments; (iii)
penalties to |
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| be incurred or moneys or refunds to be received as a |
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| result of
cancellations; and (iv) all relevant |
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| information concerning what occurs and
whether any |
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| entitlements or obligations arise if there is a |
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| difference between
the proceeds of the particular |
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| funding arrangement and the amount actually
needed to |
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| pay for the funeral at-need.
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| (D) The method of changing the
provider.
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| (b) All pre-need contracts are subject to the Federal Trade |
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| Commission Rule
concerning the Cooling-Off Period for |
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| Door-to-Door Sales (16 CFR Part 429). |
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| (b-5) A purchaser may cancel a pre-need contract within 30 |
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| days after all parties have signed the contract and shall |
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| receive 100% of all payments made under the contract. In the |
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| case of a pre-need contract funded by a pre-need insurance |
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| policy, the cancellation period under this subsection (b-5) |
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| shall continue until 30 days after signing the contract or 30 |
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| days plus the period for free cancellation of the policy under |
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| the terms of the policy or applicable law, whichever is later. |
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| No fee, surcharge, penalty, or liquidated damages may be |
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| imposed upon this right to cancel.
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| (c) No pre-need contract shall be sold in this State unless
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| there is a provider for the services and personal property |
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| being
sold. If the seller is not a provider, then the seller |
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| must have a binding agreement with a provider, and
the identity |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| of the provider and the nature of the agreement between the |
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| seller
and the provider shall be disclosed in the pre-need |
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| contract at the time of the
sale and before the receipt of any |
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| sales proceeds. The failure to disclose the
identity of the |
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| provider, the nature of the agreement between the seller and
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| the provider, or any changes thereto to the purchaser and |
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| beneficiary, or the
failure to make the disclosures required in |
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| subdivision (a)(1), constitutes an
intentional violation of |
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| this Act.
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| (d) All pre-need contracts must be in writing in at least |
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| 11 point type,
numbered, and executed in duplicate. A signed
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| copy of the pre-need contract must be provided to the purchaser |
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| at the time of
entry into the pre-need contract. The |
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| Comptroller may by rule develop
a model pre-need contract form |
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| which meets the requirements of this Act.
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| (e) The State Comptroller shall by rule develop a booklet |
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| for
consumers in plain English describing
the scope, |
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| application, and consumer protections of this Act. After the
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| adoption of these rules, no pre-need contract shall be sold in |
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| this State
unless (i) the seller distributes to the purchaser |
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| prior to the sale a
booklet promulgated or approved for use by |
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| the State Comptroller; (ii) the
seller explains to the |
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| purchaser the terms of the pre-need contract prior to
the |
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| purchaser signing; and (iii) the purchaser initials a statement |
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| in the
contract confirming that the seller has explained the |
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| terms of the contract
prior to the purchaser signing.
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| (f) All sales proceeds received in connection with a |
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| pre-need
contract shall be deposited into a trust account as |
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| provided in
Section 1b and Section 2 of this Act, or shall be |
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| used to purchase a life
insurance policy or tax-deferred |
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| annuity as provided in Section 2a
of this Act.
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| (g) No pre-need contract shall be sold in this State unless |
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| it is
accompanied by a funding mechanism permitted under this |
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| Act, and unless the
seller is licensed by the Comptroller as |
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| provided in Section 3
of this Act.
Nothing in this Act is |
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| intended to relieve sellers of pre-need
contracts from
being |
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| licensed under any other Act required for their profession or |
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| business,
and being subject to the rules promulgated to |
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| regulate their profession or
business, including rules on |
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| solicitation and advertisement.
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| (Source: P.A. 92-419, eff. 1-1-02.)
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| (225 ILCS 45/1a-2 new) |
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| Sec. 1a-2. Pre-need Funeral Contract Guarantee Fund. |
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| (a) Each licensee shall pay a fee of $5 out of the funds |
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| received for each pre-need contract sold and shall forward this |
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| sum to the Comptroller within 10 days after (i) the funds |
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| required to be placed in trust pursuant to Section 1b of this |
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| Act are deposited into the trust account or (ii) the funds are |
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| used to purchase a pre-need insurance policy. The pre-need |
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| contract shall be recorded by the Comptroller. Within 10 days |
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| after receiving the fee, the Comptroller must notify the |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| purchaser by mail of the recording of the pre-need contract. |
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| Fees collected under this Section shall be deposited into the |
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| Pre-need Funeral Contract Guarantee Fund, which is hereby |
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| created as a special fund in the State treasury. Moneys in the |
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| Fund may be expended to purchase insurance to cover losses |
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| guaranteed by the Fund. |
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| (b) In the event that the purchaser is unable to receive |
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| the benefits of his or her pre-need contract or to receive the |
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| funds due by reason of cancellation of the contract, the |
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| purchaser may apply to the Comptroller on a form prescribed by |
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| the Comptroller for restitution from the Pre-need Funeral |
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| Contract Guarantee Fund. Upon a finding by the Comptroller that |
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| the benefits or return of payment is not available to the |
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| purchaser, the Comptroller may cause restitution to be paid to |
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| the purchaser from the Pre-need Funeral Contract Guarantee |
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| Fund. |
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| (c) In all such cases where a purchaser is paid restitution |
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| from the Fund, the Comptroller shall be subrogated to that |
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| purchaser's claims against the licensee for all amounts paid |
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| from the Fund. If the licensee's liability for default is |
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| subsequently proven, any award made by a court of law shall be |
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| made payable to the Pre-need Funeral Contract Guarantee Fund up |
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| to the amount paid to the purchaser from the Fund and the |
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| Comptroller shall request that the Attorney General engage in |
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| all reasonable post-judgment collection steps to collect such |
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| claims from the judgment debtor and reimburse the Fund. |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| (d) The Fund shall not be applied toward any restitution |
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| for losses in any lawsuit initiated by the Attorney General or |
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| Comptroller or with respect to any claim made on a pre-need |
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| contract that occurred prior to the effective date of this |
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| amendatory Act of the 95th General Assembly. |
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| (e) Notwithstanding any other provision of this Section, |
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| the payment of restitution from the Fund shall be a matter of |
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| grace and not of right and no purchaser shall have any vested |
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| rights in the Fund as a beneficiary or otherwise. |
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| (f) The Fund may not be allocated for any purpose other |
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| than that specified in this Act.
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| (225 ILCS 45/1b) (from Ch. 111 1/2, par. 73.101b)
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| Sec. 1b. (a) Whenever a seller receives sales proceeds |
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| under a pre-need
contract that the purchaser elects to fund by |
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| a trust agreement, the seller may
retain an initial amount |
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| equal to 5% of the purchase price of the services,
personal |
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| property or merchandise, or 15% of the purchase price of outer |
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| burial
containers. Thereafter, a seller shall deposit into |
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| trust the amounts specified
in this Section so that no later |
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| than upon the final payment on the contract,
the trust shall |
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| equal or exceed 95% of the purchase price of all services,
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| personal property, or merchandise, except for outer burial |
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| containers, and 85%
of the purchase price of outer burial |
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| containers.
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| (b) In the event that sales proceeds to be deposited into a |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| trust are
received pursuant to a cash sale or an a retail |
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| installment contract, the seller
may retain the initial |
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| percentage authorized by subsection (a) of this Section
and any |
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| finance charge paid by the purchaser , and thereafter shall |
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| deposit into
the trust the entire balance of sales proceeds |
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| received.
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| (c) In the event that the deposits into a trust required by |
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| this Section do
not, after final payment by the consumer, |
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| result in the trust containing at
least 95% of the sales price |
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| of all services, personal property or merchandise,
except for |
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| outer burial containers and 85% of the purchase price of outer
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| burial containers, the seller shall make an additional deposit |
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| into the trust
in an amount sufficient to meet these |
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| percentages.
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| (d) The trustee may not be the seller or provider of |
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| funeral services or
merchandise unless the seller holds sales |
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| of less than $500,000 in trust, and
deposits funds for which |
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| the seller is acting as trustee in (1) withdrawable
accounts of |
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| State chartered or federally chartered savings and loan
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| associations insured by the Federal Deposit Insurance |
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| Corporation; (2) deposits
or certificates of deposits in State |
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| or federal banks insured by the Federal
Deposit Insurance |
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| Corporation; or (3) share accounts or share certificate
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| accounts in a State or federal credit union, the accounts of |
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| which are insured
as required by the Illinois Credit Union Act |
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| or the Federal Credit Union Act,
as applicable .
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