98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB5810

 

Introduced , by Rep. Dan Brady

 

SYNOPSIS AS INTRODUCED:
 
225 ILCS 45/1a-1

    Amends the Illinois Funeral or Burial Funds Act. Provides that, at the time of payment, a provider shall inform the purchaser of all the possible funding arrangements for a pre-need contract, including the distinctions between the financial results of funding the contract through a trust fund, Totten trust, annuity, or life insurance policy. Further provides that, at the time of payment, a provider shall make the purchaser aware of who the pre-need contract designates as the beneficiary.


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A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Funeral or Burial Funds Act is
5amended by changing Section 1a-1 as follows:
 
6    (225 ILCS 45/1a-1)
7    Sec. 1a-1. Pre-need contracts.
8    (a) It shall be unlawful for any seller doing business
9within this State to accept sales proceeds from a purchaser,
10either directly or indirectly by any means, unless the seller
11enters into a pre-need contract with the purchaser which meets
12the following requirements:
13        (1) It states the name and address of the principal
14    office of the seller and the parent company of the seller,
15    if any.
16        (1.5) If funded by a trust, it clearly identifies the
17    trustee's name and address and the primary state or federal
18    regulator of the trustee as a corporate fiduciary.
19        (1.7) If funded by life insurance, it clearly
20    identifies the life insurance provider and the primary
21    regulator of the life insurance provider.
22        (2) It clearly identifies the provider's name and
23    address, the purchaser, and the beneficiary, if other than

 

 

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1    the purchaser.
2        (2.5) If the provider has branch locations, the
3    contract gives the purchaser the opportunity to identify
4    the branch at which the funeral will be provided.
5        (3) It contains a complete description of the funeral
6    merchandise and services to be provided and the price of
7    the merchandise and services, and it clearly discloses
8    whether the price of the merchandise and services is
9    guaranteed or not guaranteed as to price.
10            (A) Each guaranteed price contract shall contain
11        the following statement in 12 point bold type:
12            THIS CONTRACT GUARANTEES THE BENEFICIARY THE
13        SPECIFIC GOODS AND SERVICES CONTRACTED FOR. NO
14        ADDITIONAL CHARGES MAY BE REQUIRED. FOR DESIGNATED
15        GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED
16        FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO,
17        CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT
18        PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY
19        SURVIVORS.
20            (B) Except as provided in subparagraph (C) of this
21        paragraph (3), each non-guaranteed price contract
22        shall contain the following statement in 12 point bold
23        type:
24            THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE
25        BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR
26        SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A

 

 

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1        DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE
2        GOODS OR SERVICES CONTRACTED FOR. ADDITIONAL CHARGES
3        MAY BE REQUIRED.
4            (C) If a non-guaranteed price contract may
5        subsequently become guaranteed, the contract shall
6        clearly disclose the nature of the guarantee and the
7        time, occurrence, or event upon which the contract
8        shall become a guaranteed price contract.
9        (4) It provides that if the particular supplies and
10    services specified in the pre-need contract are
11    unavailable at the time of delivery, the provider shall be
12    required to furnish supplies and services similar in style
13    and at least equal in quality of material and workmanship.
14        (5) It discloses any penalties or restrictions,
15    including but not limited to geographic restrictions or the
16    inability of the provider to perform, on the delivery of
17    merchandise, services, or pre-need contract guarantees.
18        (6) Regardless of the method of funding the pre-need
19    contract, the following must be disclosed:
20            (A) Whether the pre-need contract is to be funded
21        by a trust, life insurance, or an annuity;
22            (B) The nature of the relationship among the person
23        funding the pre-need contract, the provider, and the
24        seller; and
25            (C) The impact on the pre-need contract of (i) any
26        changes in the funding arrangement including but not

 

 

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1        limited to changes in the assignment, beneficiary
2        designation, or use of the funds; (ii) any specific
3        penalties to be incurred by the contract purchaser as a
4        result of failure to make payments; (iii) penalties to
5        be incurred or moneys or refunds to be received as a
6        result of cancellations; and (iv) all relevant
7        information concerning what occurs and whether any
8        entitlements or obligations arise if there is a
9        difference between the proceeds of the particular
10        funding arrangement and the amount actually needed to
11        pay for the funeral at-need.
12            (D) The method of changing the provider.
13    (b) All pre-need contracts are subject to the Federal Trade
14Commission Rule concerning the Cooling-Off Period for
15Door-to-Door Sales (16 CFR Part 429).
16    (c) No pre-need contract shall be sold in this State unless
17there is a provider for the services and personal property
18being sold. If the seller is not a provider, then the seller
19must have a binding agreement with a provider, and the identity
20of the provider and the nature of the agreement between the
21seller and the provider shall be disclosed in the pre-need
22contract at the time of the sale and before the receipt of any
23sales proceeds. The failure to disclose the identity of the
24provider, the nature of the agreement between the seller and
25the provider, or any changes thereto to the purchaser and
26beneficiary, or the failure to make the disclosures required in

 

 

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1subdivision (a)(1), constitutes an intentional violation of
2this Act.
3    (d) All pre-need contracts must be in writing in at least
411 point type, numbered, and executed in duplicate. A signed
5copy of the pre-need contract must be provided to the purchaser
6at the time of entry into the pre-need contract. The
7Comptroller may by rule develop a model pre-need contract form
8that meets the requirements of this Act.
9    (e) The State Comptroller shall by rule develop a booklet
10for consumers in plain English describing the scope,
11application, and consumer protections of this Act. After the
12adoption of these rules, no pre-need contract shall be sold in
13this State unless (i) the seller distributes to the purchaser
14prior to the sale a booklet promulgated or approved for use by
15the State Comptroller; (ii) the seller explains to the
16purchaser the terms of the pre-need contract prior to the
17purchaser signing; and (iii) the purchaser initials a statement
18in the contract confirming that the seller has explained the
19terms of the contract prior to the purchaser signing.
20    (f) All sales proceeds received in connection with a
21pre-need contract shall be deposited into a trust account as
22provided in Section 1b and Section 2 of this Act, or shall be
23used to purchase a life insurance policy or tax-deferred
24annuity as provided in Section 2a of this Act.
25    (g) No pre-need contract shall be sold in this State unless
26it is accompanied by a funding mechanism permitted under this

 

 

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1Act, and unless the seller is licensed by the Comptroller as
2provided in Section 3 of this Act. Nothing in this Act is
3intended to relieve sellers of pre-need contracts from being
4licensed under any other Act required for their profession or
5business, and being subject to the rules promulgated to
6regulate their profession or business, including rules on
7solicitation and advertisement.
8    (h) A provider shall, at the time of payment, inform the
9purchaser of all the possible funding arrangements for a
10pre-need contract, including the distinctions between the
11financial results of funding the contract through a trust fund,
12Totten trust, annuity, or life insurance policy. The provider
13shall, at the time of payment, make the purchaser aware of who
14the pre-need contract designates as the beneficiary.
15(Source: P.A. 96-879, eff. 2-2-10.)