June 6, 2018, Introduced by Reps. Theis and Bellino and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 2080 (MCL 500.2080), as amended by 2008 PA 513.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2080. (1) It is unlawful for any A life
or accident
insurer
authorized to do business in this state to shall not own,
manage,
supervise, operate, or maintain a mortuary or undertaking
funeral
establishment, or to permit its
officers, agents, or
employees
to own or maintain any such a
funeral or undertaking
establishment.
(2)
Except as otherwise provided in subsection (6), it is
unlawful
for any a life insurance , or sick
or funeral benefit
company, or any company, corporation, or association engaged in a
similar
business, to shall
not contract or agree with any funeral
director, undertaker, or mortuary to the effect that the funeral
director, undertaker, or mortuary conducts the funeral of any
person insured by the company, corporation, or association.
(3)
A funeral establishment, cemetery, or seller shall must
not be licensed as an insurance producer under chapter 12 other
than
as a limited licensee pursuant to under this subsection and
chapter
12. A funeral establishment, cemetery, or seller shall must
not be a limited life insurance producer unless that funeral
establishment, cemetery, or seller provides a written assurance to
the
commissioner director at the time of application for the
limited licensure and with each license renewal that he or she has
read and understands the conditions contained in subsection (9) and
agrees to comply with those conditions. A person licensed as a
limited life insurance producer under this subsection and chapter
12 is authorized and licensed to sell only an associated life
insurance policy or annuity contract and is not authorized or
licensed to sell any other type of insurance policy or annuity
contract. A person licensed as a limited life insurance producer
under this subsection and chapter 12 to sell associated life
insurance policies or annuity contracts shall not sell cemetery
goods or services or funeral goods or services unless all of the
conditions provided in subsection (9) are met. A person licensed as
a life insurance producer, other than a limited life insurance
producer, shall not sell cemetery goods or services or funeral
goods or services or be associated with a funeral establishment,
cemetery, or seller. Notwithstanding any other provision in this
act, a funeral establishment, cemetery, or seller may advise
customers or potential customers of the availability of life
insurance,
the proceeds of which may be assigned pursuant to under
subsection (6), and may provide application forms and other
information
in regard to that life insurance. If an application
form
is provided, the funeral establishment, cemetery, or seller
shall
also provide to the person a list annually prepared by the
commissioner
setting forth the life insurance companies offering in
Michigan
associated life insurance policies or annuity contracts.
The
list shall include the name, address, and telephone number of a
producer
for each of the life insurance companies listed. The list
also
shall include a statement that a person who is insured under
any
life insurance policy or annuity contract may assign all or a
portion
of the proceeds, not to exceed the amount provided in
subsection
(6)(g), of the existing life insurance policy or annuity
contract
for the payment of funeral services or goods or cemetery
services
or goods to any funeral establishment, cemetery, or seller
that
has accepted any other assignment of an associated life
insurance
policy or annuity contract during that calendar year. The
funeral establishment, cemetery, or seller shall accept an
assignment
on of the proceeds from any associated or nonassociated
life
insurance policy or annuity contract pursuant to under
subsection
(6). , and this requirement on the funeral
establishment,
cemetery, or seller shall be set forth in the
statement
prepared by the commissioner. The
assignor or the person
or persons legally entitled to make funeral arrangements for the
person whose life was insured may contract with the funeral
establishment, cemetery, or seller of his or her choice for the
rendering of the funeral goods or services or cemetery goods or
services. Except as otherwise provided in this subsection, each
associated life insurance policy or annuity contract delivered or
issued
for delivery in this state shall must have a death benefit
that is sufficient to cover the initial contract price of the
cemetery goods or services or funeral goods or services and that
increases
at an annual rate of not less than the consumer price
index.
Consumer Price Index. However, a life insurer may provide an
associated life insurance policy or annuity contract with a limited
death benefit to an insured who does not meet insurance
requirements for a policy that provides immediate full coverage or
who chooses not to answer medical questions required for a policy
that provides immediate full coverage. An associated life insurance
policy
or annuity contract with a limited death benefit shall must
disclose in boldfaced type that the death benefit will not be
sufficient to cover the initial contract price for the cemetery
goods and services or funeral goods and services for a period of up
to 2 years if the premium is not paid in full and that during this
period the price for those goods and services may increase at a
rate
higher than the increase in the consumer price index Consumer
Price Index for this period.
(4)
A person shall must not be designated as the beneficiary
in
any policy of life or accident insurance whereby under which the
beneficiary,
directly or indirectly, shall, must,
in return for all
or a part of the proceeds of the policy of insurance, furnish
cemetery services or goods or funeral services or goods in
connection
therewith.with the policy.
(5)
Except as otherwise provided in subsection (6), it shall
be
unlawful for any a life, or accident, or sick, or
funeral
benefit
company, or any other person, company, corporation, or
association,
to shall not offer or furnish goods or services or
anything but money to its insureds or to his or her heirs,
representatives, attorneys, relatives, associates, or assigns in
any
connection with, or by way of, encumbrance,
assignment,
payment, settlement, satisfaction, discharge, or release of any
insurance
policy. However, this subsection does not prohibit any a
company, corporation, or association from furnishing medical,
surgical, or hospital service.
(6) Notwithstanding any other provision in this act, a life
insurer may write a life insurance policy or annuity contract that
is subject to an assignment of the proceeds of the insurance policy
or annuity contract as payment for cemetery services or goods or
funeral services or goods as provided in this subsection regardless
of the relationship between the life insurer and the assignee. An
assignment of the proceeds of the insurance policy or annuity
contract
pursuant to under this subsection shall must be
in writing
on
a form approved by the commissioner. director. A predeath
assignment of the proceeds of a life insurance policy or annuity
contract as payment for cemetery services or goods or funeral
services or goods is void unless all of the following conditions
and criteria are met:
(a) The assignment is an inseparable part of the contract for
the cemetery services or goods or funeral services or goods for
which the assigned proceeds serve as payment.
(b) The assignment is revocable by the assignor, the
assignor's
successor , or, if
the assignor is the insured, by the
representative
of the insured's estate prior to before the
provision of the cemetery services or goods or funeral services or
goods.
(c) The contract for funeral services or goods or cemetery
services
or goods and the assignment provide that upon on
revocation of the assignment, the contract for the cemetery
services or goods or funeral services or goods is revoked and
cemetery services or goods or funeral services or goods may be
obtained from any cemetery, funeral establishment, or seller.
(d) The assignment contains the following disclosure in
boldfaced 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 will
be paid in accordance with
the beneficiary designation under the insurance policy or annuity
contract."
(e) The assignment provides for all of the following:
(i) That the actual price of the cemetery services or goods or
funeral services or goods delivered at the time of death may be
more than or less than the price set forth in the assignment.
(ii) For the assignment of an associated life insurance policy
or annuity contract, that any increase in the price of the cemetery
services or goods or funeral services or goods does not exceed the
ultimate death benefit under the life insurance policy or annuity
contract. This requirement does not apply to an insurance policy or
annuity contract with a limited death benefit during the period
that the limited death benefit is in effect. During this period,
neither
the beneficiary nor and the
seller is are not obligated to
fulfill the terms of the contract for the cemetery services or
goods or funeral services or goods for which the assigned proceeds
serve as payment and the assignment of the associated life
insurance policy or annuity contract may be revoked.
(iii) For the assignment of a nonassociated life insurance
policy or annuity contract, that any increase in the price of the
cemetery
services or goods or the funeral services or goods shall
must
not exceed the consumer price index Consumer Price Index or
the retail price list in effect when the death occurs, whichever is
less.
(iv) That if the ultimate death benefit under a the life
insurance policy or annuity contract exceeds the price of the
cemetery services or goods or funeral services or goods at the time
of
performance, the excess amount shall must be distributed to the
beneficiary designated under the life insurance policy or annuity
contract or the insured's estate.
(v) That any addition to or modification of the contract for
cemetery services or goods or funeral services or goods does not
revoke the assignment or the contract for the cemetery services or
goods or funeral services or goods that are not affected by the
addition or modification for which the assigned proceeds are
payment unless the assignment is revoked.
(f) The assignment is limited to that portion of the proceeds
of the life insurance policy or annuity contract that is needed to
pay for the cemetery services or goods or funeral services or goods
for which the assignor has contracted.
(g) For an associated life insurance policy or annuity
contract, the death benefit of the life insurance policy or annuity
contract subject to the assignment does not exceed $5,000.00 when
the first premium payment is made on the life insurance policy or
annuity contract. For a nonassociated life insurance policy or
annuity contract, the initial amount of proceeds assigned does not
exceed
$5,000.00. The maximum amounts in this subdivision shall
must
be adjusted annually in accordance with
the consumer price
index.Consumer Price Index.
(h)
The assignment shall must contain the dispute resolution
rights in subsection (8). After the death of the insured but before
the cemetery services or goods or funeral services or goods are
provided, the funeral establishment, cemetery, or seller shall
provide to a representative of the insured's estate a separate
document
entitled, "dispute resolution disclosure statement," which
shall
that must clearly set forth the dispute resolution rights in
subsection
(8). The dispute resolution disclosure statement shall
must
be filed with the commissioner director and
shall be is
considered approved unless disapproved within 30 days after the
submission. The language used to set forth the dispute resolution
rights
in subsection (8) shall must
be written in a manner
calculated
to be that is understood by a person of ordinary
intelligence.
(i) The assignor and not the assignee is responsible for
making the premium payments due on the life insurance policy or
annuity contract. This subdivision does not apply to an insurance
producer
when acting as a fiduciary pursuant to under section 1207.
(j) After the death of the insured but before the cemetery
services or goods or funeral services or goods are provided, the
representative of the insured's estate is provided with a current
price list for the cemetery services or goods or funeral services
or
goods provided pursuant to under
the assignment.
(k) At the time the assignment is made, the assignee complies
with
the price disclosure rules of the federal trade commission
Federal Trade Commission prescribed in 16 CFR part 453 whether or
not the rules by their own terms apply to the offering.
(l) At the time the assignment is made, the assignor certifies
that the insured does not have in effect other life insurance
policies or annuity contracts that have been assigned as payment
for cemetery goods or services or funeral goods or services which
together with the additional assignment would have an aggregate
face value in excess of the limitation provided in subdivision (g).
(m) For the assignment of a nonassociated life insurance
policy or annuity contract, the assignment complies with both of
the following:
(i) The assignment is sufficient to cover the initial contract
price of the cemetery goods or services or funeral goods or
services.
(ii) The assignment provides that any increase in the price of
the cemetery services or goods or the funeral services or goods
shall
must not exceed the consumer price index Consumer Price Index
or the retail price list in effect when the death occurs, whichever
is less.
(7) An insurer or an insurance producer shall not make a false
or misleading statement, oral or written, regarding an assignment
subject to subsection (6) or regarding the rights or obligations of
any party or prospective party to the assignment. An insurer or an
insurance producer shall not advertise or promote an assignment
subject to subsection (6) in a manner that is false, misleading,
deceptive,
or unfair. The commissioner director
shall promulgate
rules regulating the solicitation of plans promoting assignments
subject to subsection (6) to protect against solicitations that are
intimidating, vexatious, fraudulent, or misleading, or which take
unfair advantage of a person's ignorance or emotional
vulnerability.
(8)
After the cemetery services or goods or funeral services
or goods that are subject to an assignment under this section are
provided, the funeral establishment, cemetery, or seller shall
provide to a representative of the insured's estate a statement to
be signed by the representative of the insured's estate authorizing
the release of the assignment proceeds for the payment of the
cemetery services or goods or funeral services or goods. The
insurer shall release to the funeral establishment, cemetery, or
seller
the assignment proceeds upon on
receipt of the authorization
statement signed by a representative of the insured's estate. If a
representative of the insured's estate fails to sign the
authorization
statement, the following shall must
take place:
(a) The funeral establishment, cemetery, or seller shall
provide the representative of the insured's estate with a dispute
resolution notice, a copy of which is to be sent to the insurer and
the
commissioner director that states all of the following:
(i) That the funeral establishment, cemetery, or seller has
provided the cemetery services or goods or funeral services or
goods.
(ii) That a representative of the insured's estate has refused
to authorize the insurer to release the assignment proceeds for the
payment of the cemetery services or goods or funeral services or
goods.
(iii) That a representative of the insured's estate may seek
arbitration to resolve the payment dispute.
(b)
Upon On the receipt of the dispute resolution notice
described in subdivision (a), the insurer shall retain the
assignment proceeds for 30 days. The insurer shall release the
assignment proceeds to the funeral establishment, cemetery, or
seller if after the expiration of the 30 days the insurer is not
informed that arbitration proceedings have been commenced, or
pursuant to the award of the arbitrator.
(c) The funeral establishment, cemetery, seller, or a
representative of the insured's estate may commence arbitration
proceedings to determine the disposition of the assignment
proceeds.
Arbitration shall must be conducted pursuant to under the
rules
and procedures of the American arbitration association.
Arbitration
Association. Expenses of the
arbitration shall must be
shared equally by the insured's estate and the assignee unless
otherwise ordered by the arbitrator.
(d)
Nothing in this This subsection limits does not limit the
right of any party involved in the payment dispute to seek other
recourse permitted by law.
(9) A life insurance producer shall not sell or solicit the
sale of a life insurance policy or annuity contract with the
intention of having the purchaser assign the proceeds of the policy
or contract to a funeral establishment, cemetery, or seller with
which the producer is associated unless all of the following
conditions are met:
(a) The producer discloses in writing to the purchaser the
nature of his or her association with the funeral establishment,
cemetery, or seller and that both the funeral establishment,
cemetery, or seller and the producer will or may profit from the
transaction, if that is the case.
(b) A funeral establishment, cemetery, or seller that accepts
assignments
pursuant to under subsection (6) shall also offer
offers to sell or provide cemetery goods or services or funeral
goods
or funeral services pursuant to under
prepaid funeral
contracts as provided in the prepaid funeral and cemetery sales
act,
1986 PA 255, MCL 328.211 to 328.235, or pursuant to under the
trust provisions of the cemetery regulation act, 1968 PA 251, MCL
456.521 to 456.543.
(c) If the contemplated assignment is to be made to pay the
cost
of cemetery goods or services or funeral goods or funeral
services,
the producer shall disclose discloses
in writing to the
purchaser that the cemetery goods or services or funeral goods or
services
may also be purchased prior to before
death by making
payment directly to a funeral establishment, cemetery, or seller
who will hold funds in escrow for the benefit of the purchaser
pursuant
to under the prepaid funeral and cemetery sales act, 1986
PA
255, MCL 328.211 to 328.235, or in trust pursuant to the
provisions
of under the cemetery regulation act, 1968 PA 251, MCL
456.521
to 456.543. The written disclosure shall must also state
that
upon on cancellation of the prepaid funeral contract, the
purchaser is entitled to a refund of at least 90% of the principal
and income earned.
(d) The sale of cemetery goods or services or funeral goods or
services
shall is not be conditioned on the purchaser buying or
agreeing to buy a life insurance policy or annuity contract or on
the assignment of the proceeds of the policy or contract to that
funeral establishment, cemetery, or seller.
(e) The sale of a life insurance policy or annuity contract
shall
is not be conditioned on the purchaser buying or
agreeing to
buy cemetery goods or services or funeral goods or services from
the funeral establishment, cemetery, or seller with which the
producer is associated or on the assignment of the proceeds of the
policy or contract to that funeral establishment, cemetery, or
seller.
(f) A discount from the current price of cemetery goods or
services
or funeral goods or services shall is not be offered as
an
inducement to purchase or assign a life insurance policy or annuity
contract.
(g) The life insurance policy or annuity contract sold by the
producer may be canceled by the purchaser within 10 days after the
receipt of the policy or annuity contract, in which event a full
refund
of all premiums shall will
be paid to the purchaser.
(h)
The producer shall disclose discloses
in writing to the
purchaser that the funeral establishment, cemetery, or seller with
which the producer is associated will accept assignments of life
insurance policies or annuity contracts sold by any other licensed
producer.
(10)
The commissioner director or any other person, in order
to force compliance with subsection (6) or (7), may bring an action
in a circuit court in any county in which the assignee or insurance
producer or any other person has solicited or sold a life insurance
policy
or annuity contract that is assigned pursuant to under
subsection (6), whether or not that person has purchased the life
insurance policy or annuity contract or is personally aggrieved by
a violation of this section. The court may award damages and issue
equitable orders in accordance with the Michigan court rules to
restrain conduct in violation of this section.
(11)
Any A person violating any of the provisions of that
violates
this section is guilty of a
misdemeanor, and each
violation
shall be a separate offense and upon punishable on
conviction
shall be punished by a fine not exceeding $1,000.00 or
by
imprisonment for not more than 6 months, or both, such fine and
imprisonment
within the discretion of the
courts. Each violation is
a separate offense.
(12) In addition to the penalty provided in subsection (11),
if,
after a hearing conducted pursuant to under the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, the
commissioner
director determines a person has violated this
section,
the commissioner director may order the person to pay a
civil fine of not more than $10,000.00 for each violation and may
also
impose other sanctions provided pursuant to under chapter
12.
The
money collected under this subsection shall must be
deposited
in the funeral consumers education and advocacy fund. The funeral
consumers
education and advocacy fund is created within the office
of
financial and insurance regulation. department. The fund
shall
be
administered by the commissioner. director
shall administer the
fund.
The money in the fund shall must be
used to do both of the
following:
(a) To promote the education of consumers concerning the
prearrangement and purchase of cemetery or funeral services or
goods through the purchase and assignment of life insurance or
annuity contracts.
(b) To provide legal assistance to persons who were injured as
a result of a violation of this section.
(13) For purposes of this section, a life insurance producer
is associated with a funeral establishment, cemetery, or seller if
any of the following apply:
(a) The producer is a funeral establishment, cemetery, or
seller.
(b) The producer owns an interest, directly or indirectly, in
a corporation or other entity that holds an interest in a funeral
establishment, cemetery, or seller.
(c) The producer is an officer, employee, or agent of a
funeral establishment, cemetery, or seller.
(d) The producer is an officer, employee, or agent of a
corporation or other entity that holds an interest, either directly
or indirectly, in a funeral establishment, cemetery, or seller, or
in a corporation or other entity that holds an interest, directly
or indirectly, in a corporation or other entity that holds an
interest in a funeral establishment, cemetery, or seller.
(14) As used in this section:
(a) "Associated life insurance policy or annuity contract" is
a life insurance policy or annuity contract that is marketed,
designed, and intended to be assigned as payment for cemetery goods
or services or funeral goods or services.
(b) "Casket" means any box or container consisting of 1 or
more
parts in which a dead human body is placed prior to before
interment,
entombment, or cremation which that
may or may not be
permanently interred, entombed, or cremated with the dead human
body. A permanent interment or entombment receptacle designed or
intended for use without a cemetery burial vault or other outside
container
shall is also be considered a casket.
(c) "Catafalque" means an ornamental or decorative object or
structure
placed beneath, over, or around a casket, vault, or a
dead
human body prior to before
final disposition of the dead human
body.
(d) "Cemetery" means that term as defined in but not
necessarily regulated under section 2 of the cemetery regulation
act, 1968 PA 251, MCL 456.522, or an officer, agent, or employee
thereof.
(e) "Cemetery burial vault or other outside container" means a
box or container used solely at the place of interment to
permanently surround or enclose a casket and to support the earth
above the casket after burial.
(f) "Cemetery goods" means land or interests in land, crypts,
lawn crypts, mausoleum crypts, or niches that are sold by a
cemetery. In addition, cemetery goods include cemetery burial
vaults or other outside containers, markers, monuments, urns, and
merchandise items used for the purpose of memorializing a decedent
and placed on or in proximity to a place of interment or entombment
of
a casket, catafalque, or vault or to a place of inurnment which
that are sold by a cemetery.
(g) "Cemetery services" means those services customarily
performed by a cemetery.
(h) "Combination unit" means any product consisting of a unit
or a series of units designed or intended to be used together as
both a casket and as a permanent burial receptacle.
(i)
"Consumer price index" Price Index" means the
annual
average
percentage increase in the Detroit consumer price index
Consumer Price Index for all items for the prior 12-month period as
reported
by the United States department Department
of labor Labor
and
as certified by the commissioner.director.
(j) "Funeral establishment" means a funeral establishment or a
person
who that is engaged in the practice of mortuary science as
those terms are defined in section 1801 of the occupational code,
1980 PA 299, MCL 339.1801, or an officer, agent, or employee
thereof.of the funeral establishment or person.
(k)
"Funeral goods" means items of merchandise which that will
be used in connection with a funeral or an alternative to a funeral
or final disposition of human remains including, but not limited
to, caskets, other burial containers, combination units, and
catafalques. Funeral goods does not include cemetery goods.
(l) "Funeral services" means services customarily performed by
a
person who is licensed pursuant to sections 1801 to 1812 under
article 18 of the occupational code, 1980 PA 299, MCL 339.1801 to
339.1812. Funeral services includes, but is not limited to, care of
human remains, embalming, preparation of human remains for final
disposition, professional services relating to a funeral or an
alternative to a funeral or final disposition of human remains,
transportation of human remains, limousine services, use of
facilities or equipment for viewing human remains, visitation,
memorial services, or services used in connection with a funeral or
alternative to a funeral, coordinating or conducting funeral rites
or ceremonies, and other services provided in connection with a
funeral, alternative to a funeral, or final disposition of human
remains.
(m)
"Limited death benefit" means the sum payable upon on the
insured's death during not more than the first 2 years that an
associated life insurance policy or annuity contract is in effect
that is less than the amount necessary to cover the initial
contract price of cemetery goods and services or funeral goods and
services, but that provides for a minimum benefit as follows:
(i) During the first year of the contract, not less than 25%
of the initial contract price of cemetery goods and services or
funeral goods and services.
(ii) During the second year of the contract, not less than 50%
of the initial contract price of cemetery goods and services or
funeral goods and services.
(n) "Nonassociated life insurance policy or annuity contract"
means a life insurance policy or annuity contract that is not
marketed to be assigned, designed to be assigned, or intended to be
assigned as payment for cemetery goods or services or funeral goods
or services.
(o) "Representative of the insured's estate" means the person
or persons legally entitled to make the funeral arrangements for
the person whose life was insured.
(p)
"Seller" means a person who that offers to sell cemetery
goods or services or funeral goods or services or any agent,
officer,
or employee thereof.of the
person.