Section 610.10  Statutory Authority

 

a)         Form and Review of Pre-Need Contracts.

 

1)         All pre-need contracts must be in writing.  Any use or attempted use of any oral pre-need contract or any written pre-need contract in a form that does not meet the requirements of the Illinois Funeral or Burial Funds Act [225 ILCS 45] shall be deemed a violation of the Act.    [225 ILCS 45/1a-1(d)]

 

2)         No pre-need contract shall be sold in this State unless the seller distributes to the purchaser, prior to the sale, a booklet promulgated or approved for use by the State Comptroller; the seller explains to the purchaser the terms of the pre-need contract prior to the purchaser signing; and the purchaser initials a statement in the contract confirming that the seller has explained the terms of the contract prior to the purchaser signing. [225 ILCS 45/1a-1(e)]

 

b)         For pre-need contracts funded by life insurance or a tax-deferred annuity, the cost of an examination shall be borne by the licensee if  $10,000 or more of funeral goods and services have been funded by life insurance or annuities during the preceding calendar year.  The fee schedule for such examination shall be established in rules promulgated by the Comptroller. [225 ILCS 45/3]

 

(Source:  Amended at 26 Ill. Reg. 5772, effective April 10, 2002)

 

Section 610.20  Application

 

This Part applies to any Seller of pre-need contracts sold in this State as provided in the Illinois Funeral or Burial Funds Act.

 

Section 610.30  Definitions

 

For the purposes of this Part, the following definitions shall apply:

 

            "Act", the Illinois Funeral or Burial Funds Act [225 ILCS 45].

 

            "Contract Beneficiary", the person specified in the pre-need contract upon whose death funeral services or merchandise shall be provided or delivered. [225 ILCS 45/1a]

 

            "Funeral Goods, Funeral Merchandise, or Funeral Services", those services and items of merchandise the pre-need sale of which is governed by the Illinois Funeral or Burial Funds Act.

 

            "Income", amounts earned through investments or interest.

 

            "Licensee", a seller of a pre-need contract who has been licensed by the Comptroller.  [225 ILCS 45/1a]

 

            "Parent Company", a corporation owning more than 12 cemeteries or funeral homes in more than one state. [225 ILCS 45/1a]

 

            "Pre-need Contract", any agreement or contract, or any series or combination of agreements or contracts, whether funded by trust deposits or life insurance policies or annuities, which has for a purpose the furnishing or performance of funeral services or the furnishing or delivery of any personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body.  [225 ILCS 45/1a]

 

            "Provider", a person who is obligated for furnishing or performing funeral services or the furnishing or delivery of any personal property, merchandise or services of any nature in connection with the final disposition of a dead human body.  [225 ILCS 45/1a]

 

            "Purchaser", the person who provides for the payment of money under or in connection with a pre-need contract.  [225 ILCS 45/1a]

 

            "Sales Proceeds", the entire amount paid to a seller, exclusive of sales taxes paid by the seller, finance charges paid by the purchaser, and credit life, accident or disability insurance premiums, upon any agreement or contract, or series or combination of agreements or contracts, for the purpose of performing funeral services or furnishing personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, including, but not limited to, the retail price paid for such services and personal property and merchandise.  [225 ILCS 45/1a]

 

            "Seller", the person who sells or offers to sell the pre-need contract to a purchaser, whether funded by a trust agreement, life insurance policy, or tax-deferred annuity.  [225 ILCS 45/1a]

 

            "Trustee", a person authorized to hold funds under the Act.  [225 ILCS 45/1a]

 

            "Trust Funds", all sales proceeds, including interest earned thereon, paid to any person, partnership, association or corporation upon any agreement or contract, or any series or combination of agreements or contracts, which has for a purpose the furnishing or performance of funeral services, or the furnishing or delivery of any personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, including, but not limited to, outer burial containers, urns, combination casket-vault units, caskets and clothing, for future use at a time determined by the death of the person or persons whose body or bodies are to be disposed of.  [225 ILCS 45/1]

 

(Source:  Amended at 26 Ill. Reg. 5772, effective April 10, 2002)

 

Section 610.40  Classification of Pre-Need Contract by Funding Methods

 

a)         For the purposes of this Part, pre-need contracts shall be classified as follows:

 

1)         Pre-need contracts funded by trust deposits.

 

2)         Pre-need contracts funded by life insurance or a tax-deferred annuity.

 

b)         Pre-need contracts funded by trust agreements.  In addition to complying with the requirements of Section 610.50, pre-need contracts funded by trust agreements must also contain:

 

1)         Unless the pre-need contract has been made irrevocable, a statement that the purchaser, prior to the death of the persons for whose funeral or burial such funds were paid, has the right to cancel the pre-need contract and receive a refund as authorized or required by the Illinois Funeral or Burial Funds Act.

 

2)         A statement that all refunds required under the Act will be made within 30 days after written demand.

 

c)         Pre-need contracts funded by life insurance or tax-deferred annuity.  In addition to complying with the requirements of Section 610.50, pre-need contracts funded by life insurance or a tax-deferred annuity must also contain:

 

1)         A statement that the seller or provider may not be named as the owner or beneficiary of the policy or the annuity.

 

2)         A statement that the assignment of the ownership of the insurance policy is revocable, except that a purchaser may irrevocably assign ownership of an insurance policy or annuity used to fund a guaranteed price pre-need contract to a person or trust for the purpose of obtaining favorable consideration for Supplemental Social Security Income benefits (SSI), Medicaid or other public assistance. For this purpose, the seller or contract provider may be named a nominal owner of the life insurance policy only for such time as it takes to immediately transfer the policy into trust.  The assignment provision in the pre-need contract must contain the following statement on irrevocability in 12 point bold type:

 

            This assignment may be revoked by the assignor or assignor's successor or, if the assignor is also the insured and deceased, by the representative of the insured's estate before the rendering of the cemetery services or goods or funeral services or goods.  If the assignment is revoked, the death benefit under the life insurance policy or annuity contract shall be paid in accordance with the beneficiary designation under the insurance policy or annuity contract. [225 ILCS 45/2a(d)]

 

3)         A statement that all refunds required under the Act will be made within 30 days after written demand.

 

(Source:  Amended at 26 Ill. Reg. 5772, effective April 10, 2002)

 

Section 610.50  Requirements for all Pre-Need Contracts

 

a)         Pre-need contracts required to be filed with the Comptroller must meet the criteria set forth in this Section.  All pre-need contracts submitted between January 1, 1994 and July 3, 1996 shall be deemed to have been submitted on the effective date of this Part.

 

b)         Required Contents:

 

1)         Name and address of the principal office of the seller and, if applicable, the parent company of the seller.

 

2)         Name of purchaser and contract beneficiary, if different from the purchaser and known.

 

3)         Name and address of provider's principal office,  but if the provider has branch locations, the name and address of the branch at which the funeral will be performed, if specified by the purchaser.

 

4)         Complete description and price of funeral merchandise and services.

 

5)         Disclosure of whether the contract is guaranteed or non-guaranteed as to the price or if the contract contains both guaranteed price items and non-guaranteed price items a clear statement of which goods and services are guaranteed and which are not.

 

A)        Each contract for goods and services for which the price is guaranteed, or which contains both guaranteed and non-guaranteed items, shall contain the following statement in 12 point bold type:

 

            THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC GOODS AND SERVICES CONTRACTED FOR.  NO ADDITIONAL CHARGES MAY BE REQUIRED FOR DESIGNATED GOODS AND SERVICES.  ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO, CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY SURVIVORS. [225 ILCS 45/1a-1(a)(3)(A)]

 

B)        Except as provided in subsection (b)(5)(C), each contract for goods or services for which the price is not guaranteed, or which contains both guaranteed and non-guaranteed items, shall contain the following statement in 12 point bold type:

 

            THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR SERVICES.  ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE GOODS OR SERVICES CONTRACTED FOR.  ADDITIONAL CHARGES MAY BE REQUIRED.  [225 ILCS 45/1a-1(a)(3)(B)]

 

C)        If a non-guaranteed price contract may subsequently become guaranteed, the contract shall clearly disclose the nature of the guarantee and the time, occurrence, or event upon which the contract shall become a guaranteed price contract.

 

6)         Where the particular goods and services specified are unavailable at the time of delivery, the contract shall state that supplies and services similar in style and equal quality will be provided.

 

7)         Any penalties or restrictions in performing the contract must be fully stated.

 

8)         The method of funding the pre-need contract must be stated along with the following information:

 

A)        The relationship among the funding person, the provider, and the seller.

 

B)        The impact on the pre-need contract if the following occurs:

 

i)          Changes in the funding arrangements or use of funds.

 

ii)         Penalties to be incurred if the purchaser fails to make payments.

 

iii)        Penalties to be incurred or moneys or refunds to be received as a result of the cancellation.

 

iv)        A difference between the proceeds of the funding arrangement and the amount actually needed for the funeral at-need.

 

9)         The method for changing the designation of the provider must be fully described.

 

10)       Unless the pre-need contract provides for more liberal cancellation terms, every pre-need contract sold outside of the seller's principal place of business is subject to the Federal Trade Commission rule (16 CFR 429) concerning the Cooling-Off Period for Door-to-Door Sales.  The FTC Rule provides that with any door-to-door sale the seller must furnish the purchaser a completed receipt or copy of any contract pertaining to the sale at the time the contract is signed.  The seller must comply with the following terms:

 

A)        A completed receipt or copy of the pre-need contract at the time of signing must be furnished to the purchaser.

 

B)        The same language must be used in both the oral sales presentation and the written contract to the purchaser.

 

C)        Notice of purchaser's right to cancel within 3 days after signing pre-need contract.  The notice must be as follows:

 

i)          Located close to the signature line.

 

ii)         Printed in 12 point bold type.

 

iii)        State that "YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION."

 

D)        All monies must be refunded without penalty within 10 days after cancellation.

 

11)       In addition to the cancellation provisions of subsection (b)(10) of this Section, each pre-need contract shall include a statement that the purchaser has the right to cancel the pre-need contract prior to need and receive a refund as authorized or required by the Illinois Funeral or Burial Funds Act within 30 days after written demand.  Nothing in this Section shall prohibit a purchaser who is or may become eligible for public assistance from making a guaranteed price contract irrevocable in an amount prescribed by rule of the Illinois Department of Public Aid to the extent that federal law or regulations require that such a contract be irrevocable for purposes of the purchaser's eligibility for Supplemental Social Security Income benefits, Medicaid, or other public assistance program, as permitted under federal law.

 

c)         Where a pre-need contract has been made irrevocable in an amount prescribed by rule by the Illinois Department of Public Aid for the purpose of maintaining eligibility for Supplemental Security Income benefits (SSI), Medicaid or other public assistance, a licensee is required to provide written notification to the Illinois Department of Public Aid whenever the licensee knows or reasonably should know that the amount in trust or the death benefit under a life insurance policy or annuity contract exceeds the cost of the funeral merchandise or services by more than 25%, at the time the merchandise is provided and the services are performed.

 

(Source:  Amended at 26 Ill. Reg. 5772, effective April 10, 2002)

 

Section 610.60  Trust Investment in Life Insurance or Annuities

 

a)         A Trustee of a trust account shall not invest trust funds in life insurance policies or tax deferred annuities unless the following requirements are met:

 

1)         The company issuing the life insurance policies or tax-deferred annuities is licensed by the Illinois Department of Insurance and the insurance producer or annuity seller is licensed to do business in the State of Illinois;

 

2)         Prior to the investment, the purchaser approves, in writing, the investment in life insurance policies or tax-deferred annuities;

 

3)         Prior to the investment, the purchaser is notified by the seller in writing about the disclosures required for all pre-need contracts under Section 1a-1 of the Act, and the purchase of life insurance or a tax-deferred annuity is subject to the requirements of Section 2a of the Act;

 

4)         Prior to the investment, the trustee informs the comptroller that trust funds shall be removed from the trust account to purchase life insurance or a tax-deferred annuity upon the written consent of the purchaser;

 

5)         The purchaser retains the right to refund provided for in the Act, unless the pre-need contract is sold on an irrevocable basis as provided in Section 4 of the Act; and

 

6)         Notice must be given in writing that the cash surrender value of a life insurance policy may be less than the amount provided for by the refund provisions of the trust account.

 

Section 610.70  Requirements for Pre-Need Booklet

 

After the adoption of a rule prescribing a pre-need booklet, no pre-need contract may be sold in this State unless it is accompanied by a booklet that contains the following requirements:

 

a)         Requirements for pre-need contracts as set forth in Section 1a-1 of the Act.

 

b)         All disclosures in accordance with Sections 1a-1, 1b, 2a, 4, and 4a of the Act.

 

c)         The funding mechanism as set forth in Section 1a-1(6)(a) of the Act.

 

d)         Any other statutory requirements under the Act.

 

Section 610.80  Licensing of Sellers of Pre-Need Contracts Funded by Life Insurance or Tax-Deferred Annuity

 

a)         Any seller of pre-need contract which is funded by life insurance or a tax-deferred annuity shall obtain an individual license unless the seller is an employee of a licensee.  An insurance producer, annuity seller, or any individual who serves in that capacity shall not be considered an employee unless the employment relationship indicates otherwise for purposes of this Part.

 

b)         The annual report required to be filed by the licensee with the Office of the Comptroller may be filed by the company with which the insurance producer, annuity seller, or any individual acting in that capacity is affiliated so long as all books, records and other information as required under this Act are provided. The licensee shall remain responsible for the timely filing of the annual report and shall acknowledge in writing that the annual report is true and accurate.

 

Section 610.90  Schedule of Charges for Examinations for Licensee of Pre-Need Contracts Funded by Life Insurance or Tax-Deferred Annuity

 

a)         The charge made by the Comptroller for an examination shall be based upon the total amount of premiums received during the previous calendar year from life insurance or tax-deferred annuities for which the report is required under the Act.

 

b)         The following fee schedule establishes the cost to be paid by licensees for the examination of books and records of the licensee:

 

Less than $10,000............................................................................... no charge

$10,000 or more but less than $50,000........................................................ $10

$50,000 or more but less than $100,000...................................................... $40

$100,000 or more but less than $250,000.................................................... $80

$250,000 or more....................................................................................... $100

 

Section 610.EXHIBIT A   Illinois Consumer Guide to Pre-Need Funeral and Burial Purchases

 

ILLINOIS CONSUMER GUIDE TO PRE-NEED

FUNERAL AND BURIAL PURCHASES

 

What Is the Funeral or Burial Funds Act?

 

The Illinois Funeral or Burial Funds Act [225 ILCS 45] (the law), gives consumers certain rights and protections when they purchase funeral or burial services and merchandise in advance of need (pre-need).  The State Comptroller has the duty to administer and enforce this law.

 

What is "Pre-Need" Funeral or Burial Purchasing?

 

The purchase of pre-need funeral or burial merchandise and services occurs when you enter into an agreement to acquire and pay for funeral or burial merchandise and services before you need them.

 

What Is a Pre-Need Sales Contract?

 

A pre-need funeral or burial sales contract is a legal agreement between a consumer and a funeral home, or a cemetery (seller) for funeral or burial merchandise and services. The merchandise and services will be supplied at a future date by a funeral home or a cemetery (provider).

 

Sellers of Pre-Need Services and Merchandise Must Be Licensed.

 

Sellers of pre-need services and/or merchandise must be licensed by the State of Illinois through the Office of the Comptroller.  You should verify that the person with whom you are doing business is licensed to sell pre-need services and merchandise before you make your purchase. You may contact the Comptroller's Office to verify whether a seller is licensed.

 

What Services and Merchandise are Covered by the Funeral or Burial Funds Act?

 

The law covers the purchase of funeral services, clothing, caskets, grave boxes, grave liners, burial vaults and urns.  Sales of cemetery services, such as the preparation of a plot or the placement of a headstone, or cemetery merchandise, such as grave markers and mausoleums, are not covered by the law.  The purchase of cemetery services and merchandise may be covered by the Illinois Pre-Need Cemetery Sales Act [815 ILCS 390] and Cemetery Care Act [760 ILCS 100].  If you have any questions about which law applies to your purchase, you may contact the Comptroller's Office for assistance.

 

What Must the Seller Tell You in a Pre-Need Contract?

 

All pre-need contracts sold in Illinois must contain certain disclosures to help you the consumer understand your rights. Always check your contract for the following information:

 

•           The seller's name and address;

 

•           The provider's name and address;

 

•           When a provider has branch locations, a place in the contract where the consumer may select the branch where the funeral or burial will be performed;

 

•           The buyer and the beneficiary; 

 

•           A complete description of the merchandise and/or services purchased;

 

•           Whether the contract is for a guaranteed or non-guaranteed price;

 

•           How the merchandise and/or services will be funded (i.e., through a trust account, life insurance policy or annuity);

 

•           The name of the trustee or the insurance provider;

 

•           The governmental body that regulates the trustee or the insurance provider; and

 

•           The seller's policy and penalties if the buyer cancels the contract or defaults on payment.

 

What are Guaranteed and Non-Guaranteed Contracts?

 

A "guaranteed contract" means that you are guaranteed the services and/or merchandise you selected for the amount of money stated in the contract.  You or your estate will not be required to pay any additional costs for the items guaranteed unless unexpected charges are incurred.

A "non-guaranteed" contract means that the price of the services or merchandise you select will be determined at the time they are needed. Any payments you make under the contract act like a deposit to reduce the out-of-pocket expense at the time of need. If the "deposit" does not cover the entire cost of the merchandise or services, you or your estate pay the difference at the time of need. If your contract does not guarantee a price, it must clearly state "non-guaranteed contract". Be sure to read your contract carefully.

 

Some non-guaranteed price contracts are set up to later become guaranteed price contracts. In these cases, the contract must clearly state the time or event when the price becomes guaranteed and the nature of the guarantee.

 

Pre-Need Contracts Funded by Life Insurance Policies and Annuities vs. Pre-Need Contracts Funded by Trusts.

 

Under Illinois law, all pre-need contracts must be funded through an insurance policy, a tax deferred annuity, or a trust. Your contract must clearly state which of these three funding mechanisms applies to it.

 

a.         Life Insurance Policies and Annuities

 

Pre-need contracts funded by life insurance policies or tax-deferred annuities are planning tools offered by insurance companies. The contracts may be purchased directly from an insurance company or through a licensed insurance agent working on behalf of the funeral home or cemetery. If you buy through a licensed insurance agent working on behalf of the funeral home or cemetery, any payments you make to the funeral home or cemetery must be mailed to the insurance company within 30 days after receipt of the contract. 

 

Your insurance policy will provide the details of the coverage, including the cost, payout provisions and cancellation fees. Be sure to read both the contract and the insurance policy carefully.

 

b.         Trust Accounts

 

When funeral homes or cemeteries sell pre-need contracts funded by a trust, the seller must send a certain percentage of your payments to a trustee for deposit in a trust account. The trustee is an independent company that must hold this money until the merchandise or services are actually needed (or until you cancel your contract and seek a refund). Review your contract for the name of the trustee and the trustee's contact information.

 

Sellers must send 85% of the purchase price of outer burial containers (burial vaults) and 95% of the purchase price of all other merchandise and services to the trustee within 30 days after receipt of the contract. Each year you will receive a trust account statement (much like a bank account statement) from the trustee. This is an important consumer protection, so be sure to watch for your annual statement. If you do not receive an annual statement, contact the trustee named on your contract. If the trustee cannot be located or cannot assist you, contact the Comptroller.

 

Can I Get My Money Back If I Change My Mind?

 

Yes, unless a pre-need contract is made irrevocable, you may cancel at any time. The penalties for cancelling a pre-need contract will be different depending upon when the contract is cancelled and the funding method used.

 

a.         Contracts Sold Outside the Seller's Place of Business

 

If you did not purchase your contract at the seller's place of business, including but not limited to door-to-door sales, then the contract is subject to the Federal Trade Commission's "Cooling-Off Period for Door-to-Door Sales" rule. Under this rule, you have the right to cancel the contract within three business days after signing it without any penalty. 

 

b.         Paid in Full Contracts Cancelled Before the Time of Need

 

If you cancel a contract for services or merchandise funded by a trust after it is paid in full but before the time of need, the seller must refund 95% of the purchase price plus net earnings. For contracts for outer burial containers funded by a trust, the seller must refund 85% of the purchase price plus net earnings.

 

If you cancel a contract funded by an insurance policy or annuity, you are entitled to the cash surrender value of the insurance policy or annuity. (Cancellation of an insurance policy does not necessarily cancel the pre-need contract.)

 

c.         Paid in Full Contracts Cancelled After the Time of Need

 

If a contract is paid in full but it is decided at the time of need that the funeral or burial will be held elsewhere or that the merchandise or services will not be used, the seller may keep 10% of the payments made under the contract or $300, whichever is less. The remainder of the trust funds or insurance or annuity proceeds will be provided to the legal heirs or according to a probate action.

 

d.         Partially Paid Contracts

 

If you cancel before your contract is paid in full or if you default on payments, the seller may keep 25% of the payments made under the contract or $300, whichever is less.

 

The Illinois Pre-Need Funeral Consumer Protection Fund

 

If you are not provided the funeral or burial merchandise promised in the contract and are not provided a refund, you or your estate may be able to recover your losses from the State's Pre-need Funeral Consumer Protection Fund. Contact the Comptroller's Office to apply for consumer protection funds.

 

What Can You Do If You Believe You Were Treated Unfairly?

 

If you think that you have been a victim of unfair or illegal practices in the handling of pre-need funds, you may file a written complaint with the Office of the Comptroller, Pre-Need Licensing and Certification Enforcement (PLACE) Division, James R. Thompson Center, Suite 15-500, 100 West Randolph Street, Chicago, Illinois 60601. In addition, the State Attorney General can seek a court order for restitution and issuance of fines.  If you believe that improprieties exist in connection with the sale of insurance or annuities used to fund a pre-need contract, you can file a complaint with the Illinois Department of Insurance, 320 West Washington, Floor 4, Springfield, Illinois 62767.

 

Questions or Concerns?

 

If you have questions or concerns about your pre-need contract, please call the Comptroller's toll-free consumer hotline at (877)203-3401; mail your inquiry to the Illinois Office of the Comptroller, PLACE Division, 100 West Randolph Street, Suite 15-500, Chicago, Illinois 60601; or visit our PLACE webpage at http://www.ioc.state.il.us/office/place/.

 

(Source:  Amended at 37 Ill. Reg. 15365, effective September 9, 2013)