(1) No contract
seller shall use a pre-need contract form unless the contract seller has
submitted the form to the Commissioner, and the Commissioner has approved the
form.
(2) Every pre-need contract
shall contain, at a minimum, the following:
(a) a statement as to whether the contract
establishes a revocable trust account or an irrevocable trust account;
1. if such trust account is revocable, a
statement that the purchaser of the merchandise and/or services under the
contract shall be entitled to receive any or all of the payments made and any
earnings or interest thereon upon demand on the trustee prior to the death of
the contract beneficiary;
2. if
such trust account is irrevocable, the contract shall state on its face and in
boldface type and all uppercase letters the following:
"The trust account established by this contract is
irrevocable, and the funds paid hereunder are not refundable. Accumulated trust
principal and interest are freely transferable to satisfy funeral expenses at
any licensed funeral establishment as provided by law."
(b) a clear disclosure as to
whether the funds identified as having been paid or are to be paid:
1. are to be applied to the price of funeral
merchandise and services to be selected by a designated person at the time of
death of the person for whom the funds were paid. In the event this condition
applies, the contract shall state on its face in boldface type and uppercase
letters, the following:
"_________________________if the amount in the
(Purchaser's Signature)
trust account exceeds the prevailing price (at the time of
selection) of the funeral merchandise and services selected, the balance
remaining shall be refunded to
_________________________________________________________
(Name)."
2. fully pay for the funeral merchandise and
services (or their equivalent) identified therein; or
3. fully pay for the funeral merchandise and
services (or their equivalent) identified therein, if and only if the
prevailing price thereof at the time of the death of the contract beneficiary
does not exceed the amount in the trust account at that time.
(c) a means whereby the purchaser
can indicate his or her choice of either paying or not paying any applicable
sales or use tax for the related merchandise or services at the time the
contract is entered into;
(d) a
complete disclosure of the pricing arrangement and of any contingent
liabilities or costs of the buyer;
(e) a disclosure that, upon the death of the
contract beneficiary, the trustee shall release an amount equal to the agreed
purchase price to the contract seller upon proof of death of the contract
beneficiary and verification that all of the terms of the pre-need contract
have been fully performed by the contract seller;
(f) a disclosure that the trustee shall pay
any balance remaining in the trust fund after payment for the funeral
merchandise and services in accordance with the pre-need contract:
1. to the contract buyer or his estate, if
such merchandise and services are itemized in the contract; or
2. to the person designated by the contract
buyer in the boldface disclosure required by part (2)(b)1. of this rule, if
selection of such merchandise and services is deferred until the death of the
contract beneficiary.
(g) a disclosure that the contract, books,
records and accounts pertaining to the contract buyer's contract shall be
available for inspection by the contract buyer at the contract seller's place
of business during normal working hours;
(h) a disclosure of the identity and address
of the trustee for the purchaser's funds and that notification to purchasers
need not be made upon change of trustees so long as this information is
available upon request; and
(i) a
disclosure that if the buyer and seller agree upon a reasonable fee for the
trustee, such fee will be paid in the manner prescribed by these
rules.
(3) No pre-need
contract form shall contain:
(a) a provision
specifying any particular investment of trust funds; or
(b) any provision not in compliance with
Tenn. Code Ann. Title 62, Chapter 5, Part 4, or any of these rules.
(4) The contract seller shall give
to the contract buyer a copy of the pre-need contract, and any amendment
thereto, at the time of its execution.
(5) No approval of a pre-need contract form
by the Commissioner shall be used for advertising or promotional
purposes.
(6) As soon as possible
after the submission of a proposed pre-need contract form pursuant to this
rule, the Commissioner shall approve or disapprove the form in writing;
provided, however, that a preneed contract form shall be deemed approved unless
disapproved within sixty (60) days after its receipt. In the event that the
Commissioner disapproves a preneed contract form, the Commissioner shall
specify in what respect such form does not meet the requirements of
law.
