(a) If amounts paid by the purchaser under a preneed contract for funeral merchandise have previously been deposited in trust, the seller may withdraw the principal amount and trust appreciation attributable to the delivered item at such time as the funeral merchandise is delivered or installed or, if comprised of materials designed to withstand prolonged, protected storage without deterioration, the merchandise is placed in storage with a responsible third party bonded and insured for the wholesale value thereof and evidenced by a receipt specifically identifying the item, the specific preneed contract, the location of the item, and the identity and address of the bonding and insuring parties. For purposes of this subsection only, caskets and alternative containers may not be held in storage by the seller or a third party storage facility prior to the death of the funeral beneficiary.
(b) The trustee shall make regular valuations of the assets it holds in trust and provide a report of the valuations to the certificate holder at least quarterly. At all times, the certificate holder shall be able to determine the amount held in trust attributable to each contract holder. For all contracts effective on or after January 1, 2015, the determination shall be based upon the fair market value of the trust at the time and the proportionate share of the fair market value attributable to each contract holder. For all contracts in effect before January 1, 2015, the valuation of each contract may be calculated using any valuation method that had been approved by the commissioner or the department before January 1, 2015. Any person who withdraws appreciation in the value of trust, other than the pro rata portion of such appreciation which may be withdrawn upon the death of a contract's funeral beneficiary or upon cancellation of a preneed contract, shall be required to make additional deposits from his or her own funds to restore the aggregate value of assets to the value of funds deposited in trust, but excluding from the funds deposited those funds paid out upon preneed contracts which the person has fully performed or which have been otherwise withdrawn, as provided in this article. The certificate holder shall be liable to third parties to the extent that income from the trust is not sufficient to pay the expenses of the trust.
(c) The trustee of the trust established pursuant to this article shall have all of the following powers:
(1) Make investments and exercise necessary investment powers, provided that the commissioner may by order require the trustee to liquidate or dispose of any investment within 30 days after the order.
(2) Commingle the property of the trust with the property of any other preneed funeral, preneed cemetery, or endowment care trust established pursuant to this article and make corresponding allocations and divisions of assets, liabilities, income, and expenses.
(d) Notwithstanding the provisions of Section 19-3-125, the trustee may, subject to compliance with the requirements set forth below, invest any portion or all of the funds received under preneed contracts and deposited in trust in life insurance contracts or annuities issued on the lives of preneed contract purchasers or preneed contract beneficiaries, hereinafter, the insured or annuitant, without any obligation to cover at a minimum the retail amount of the preneed contract at the time of purchase of the life insurance contracts or annuities as set forth in Section 27-17A-3.
(1) Trust funds shall not be invested by the trustee in life insurance contracts or annuities unless the following requirements are met:
a. The company issuing the life insurance contracts or annuities is licensed by the Department of Insurance and the insurance producer or annuity seller is properly licensed within its domiciliary jurisdiction.
b. Prior to the investment, the insured or annuitant consents, in writing, to the investment in life insurance contracts or annuities.
c. For life insurance contracts or annuities issued prior to May 6, 2008, and currently in force, such contracts shall be construed to have been an authorized investment by the trustee under this chapter if the insured or annuitant is notified in writing of the existence of any such contract and provided with a copy of the contract.
(2) Upon request, the insured or annuitant shall be provided with a copy of any life insurance contract or annuity issued to a preened trustee at no expense to the insured or annuitant.
(3) Any life insurance contract or annuity issued in accordance with this subsection and otherwise in compliance therewith shall be valid and in full force according to the terms and conditions thereof.
(4) A trustee that invests all or any portion of the funds received under preneed contracts and deposited in trust in life insurance contracts or annuities issued by one company licensed by the department shall be considered to satisfy the standards and requirements of Section 19-3-120.2 and Chapter 3B of Title 19.
(5) It is the intention of the Legislature that this subsection shall be retroactive and shall apply to all life insurance contracts or annuities issued prior to May 6, 2008.
Last modified: May 3, 2021