10.29.06 Preneed Contract Flashcards Preview

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Flashcards in 10.29.06 Preneed Contract Deck (56)
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1

These regulations apply to all preneed contracts entered into by a licensed mortician, a licensed funeral director, and a holder of a surviving spouse license with a buyer.

10.29.06.01 Scope

2

The report required annually to document those preneed trust accounts established in 1998 and after 1998.

Annual Report

3

Funeral arrangements made after the death of an individual by one authorized to make those arrangements.

At Need

4

The individual on whose behalf the preneed contract is purchased.

Beneficiary

5

The state board of morticians and funeral directors.

Board

6

An individual who agrees to buy certain mortuary science services and merchandise in a preneed contractual arrangement.

Buyer

7

A combination casket and outer burial enclosure.

Casket Vault

8

Preneed contract.

Contract

9

An arrangement, which cannot be revoked after its creation, by which property is transferred with the intention that it be administered by a trustee for another's benefit.

Irrevocable Trust

10

An individual who has been issued either a mortician, funeral director, or surviving spouse license by the Board.

Licensee

11

The form provided by the Board to show the allocation of preneed funds.

Preneed Addendum Form

12

An agreement entered into by a licensed mortician, a licensed funeral director, or holder of a surviving spouse license with a buyer in advance of the death of that individual or beneficiary.

Preneed Contract

13

A licensed mortician, licensed funeral director, or holder of a surviving spouse license who agrees to sell certain mortuary science services or merchandise in a preneed contractual arrangement between a buyer and a funeral establishment.

Seller

14

The seller of preneed mortuary services or merchandise selected under the terms of an irrevocable trust arrangement established on behalf of the beneficiary for the purpose of eligibility for Social Security or other governmental benefits.

Trustee

15

The seller has died or become disabled, or that the funeral service business has discontinued.

Unable to Perform

16

Only a licensed mortician, licensed funeral director, or holder of a surviving spouse license may make prearrangements and execute preneed contracts with buyers.

10.29.06.03 Execution of Preneed Contract

A

17

The seller shall present to the buyer a preneed contract which contains all of the information set forth in Health Occupations Article 7-404, Annotated Code of Maryland.

10.29.06.03 Execution of Preneed Contract

B

18

The seller and buyer of a preneed contract shall execute the contract in duplicate, with a copy of the original contract given to the buyer at the time that the contract is signed.

10.29.06.03 Execution of Preneed Contract

C

19

  1. The time required for fulfilling the terms and conditions of the contract;
  2. The cancellation terms; and
  3. The condition of refunds.

10.29.06.03 Execution of Preneed Contract

D. The Seller Shall State in the Preneed Contract:

20

On June 15 of every year, the seller shall file with the Board a report on forms provided by the Board which includes:

  1. A certification by a certified public accountant of the seller's compliance with Health Occupation Article 7-405, Annotated Code of Maryland; and
  2. Any other information the Board considers necessary.

10.29.06.03 Execution of Preneed Contract

E

21

A preneed contract may be funded by a life insurance policy or an annuity contract.

10.29.06.03 Execution of Preneed Contract

F

22

A seller who funds preneed contracts using a life insurance policy or an annuity shall have an insurance license.

10.29.06.03 Execution of Preneed Contract

G

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  1. Give the buyer a copy of the completed contract form signed and executed by the licensee, buyer, and insurance agent at the conclusion of preneed arrangements.
  2. Ensure that the insurance company listed on the application for insurance is the recipient of the payment when the buyer is executing payment;
  3. Send a copy of the certificate of insurance to the buyer immediately upon receipt of the approved insurance policy; and
  4. Present a copy of a filed death certificate policy claim form and other information required by the insurance company for payment of services provided under the preneed insurance contract.

10.29.06.03 Execution of Preneed Contract

H. A Seller who Funds Preneed Contracts Using a Life Insurance Policy or Annuity Shall:

24

Funds may not be transferred from a money-trust to an insurance-funded vehicle without the approval and signature on the insurance application of the buyer or legal representative of the buyer.

10.29.06.03 Execution of Preneed Contract

I.

25

Within 10 days of recieving payment under a preneed contract, the seller shall deposit into an interest-bearing escrow or trust account that is insured by the Federal Deposit Insurance Corporation (FDIC):

  1. An amount from the payment that is equal to at least 80 percent of the selling price of a casket or casket vault under the preneed contract; and
  2. 100 percent of the payment that is for all other goods and services under the preneed contract.

10.29.06.04 Disposition of Preneed Contract Fund

A

26

The seller need not have a separate interest-bearing escrow or trust account for each preneed contract executed.

10.29.06.04 Disposition of Preneed Contract Fund

B

27

The seller may place in the escrow account with the other funds up to 100 percent of the price of the casket or casket vault.

10.29.06.04 Disposition of Preneed Contract Fund

C.

28

  1. The interest or dividends earned by the interest-bearing escrow or trust account belongs to the buyer o the contract.
  2. The seller shall send to the buyer a tax form stating the amount of the interest accumulated in the account each year that the contract is in effect until the time of death of the beneficiary.
  3. It is the responsibility of the buyer to pay the taxes due on that interest.
  4. Money remaining in the interest-bearing escrow or trust account after the performance of the contract belongs to the seller.

10.29.06.04 Disposition of Preneed Contract Fund

D. Interest on Preneed Contract Fund

29

The seller may not withdraw from the account the money recieved from the buyer unless the services and merchandise have been provided as agreed to in the contract or unless the buyer terminates the contract.

10.29.06.04 Disposition of Preneed Contract Fund

E.

30

  1. The buyer or legal representative of the buyer forwards a notarized statement and withdrawal request stating that the seller may:
    1. Cancel the prepaid contract is revocable; or
    2. Transfer the monies to a named substitute trustee if the prepaid contract is irrevocable; or
  2. The funeral home presents a copy of a filed or certified death certificate to the banking institution holding the account funds for payment of services provided under a preneed contract.

10.29.06.04 Disposition of Preneed Contract Fund

F. The Seller may Withdraw Money from the Account if one of the Following Conditions are met: