Contracts entered into after December 31, 1995, and before July 1,
1999
Sec. 12.1. (a) This section applies to contracts for prepaid services
or merchandise, or both, entered into under this chapter after
December 31, 1995, and before July 1, 1999.
(b) A purchaser may enter into more than one (1) contract under
this chapter for prepaid services or merchandise, or both. Each
contract may be funded with cash, either in a lump sum or
installment payments, or an insurance policy, or both. The purchaser
may revoke the contract if the purchaser sends the seller written
notice of the revocation within thirty (30) days after the contract is
signed by the purchaser and seller. If a purchaser revokes a contract,
the seller shall refund to the purchaser, without interest, all property
used to fund the contract. If the seller receives payment of at least
five hundred dollars ($500) in cash that must ultimately be placed in
trust or escrow under this section, the seller shall, not more than five
(5) days after receiving the payment, deposit the payment in escrow
pending irrevocable deposit to trust or escrow authorized by either
subsection (h) or (i). Thirty (30) days after the contract is signed all
property paid or delivered to the seller to fund each contract shall be
irrevocably deposited by the seller to trust or escrow authorized by
either subsection (h) or (i). Except for installment contracts funded
with cash and contracts funded with a newly issued insurance policy
that has a limited or qualified death benefit period, all sellers shall
guarantee the provision of all services and merchandise sold under
a contract authorized by this chapter. At delivery, a seller may not
impose additional charges to recover a difference between the
original contract retail prices or current retail prices for services and
merchandise that are sold under the contract, whichever is greater,
and the amount on deposit in trust or escrow.
(c) If a contract under this chapter is funded with an insurance
policy, the ownership of the insurance policy must be irrevocably
assigned to a trustee. The seller may not borrow against, pledge,
withdraw, or impair the cash value of the policy.
(d) A finance charge may be assessed on a contract sold on an
installment basis, and the seller shall disclose to the purchaser all the
applicable requirements under federal and state law.
(e) A seller or successor seller who has accepted cash or an
insurance policy, or both as full payment of a contract under
subsection (b) is responsible for providing all contracted prepaid
services and merchandise if the insurance company or trust company
used to fund the contract is insolvent.
(f) A purchaser who purchases a contract with cash or through an
insurance contract shall make the payment for the contract payable
only to the seller or insurer, respectively.
(g) A seller may not accept or deposit to trust or escrow cash, an
insurance policy, or any other property as consideration for services
or merchandise to be provided in the future except in connection
with a contract authorized by this chapter.
(h) A trust account authorized and established under this chapter
must:
(1) be irrevocable and require the seller to deposit to trust all
sums or property received from the purchaser;
(2) designate the seller as settlor and the seller as beneficiary;
(3) designate a trustee qualified under this chapter and authorize
the trustee to charge a reasonable fee for services;
(4) require that a separate account be maintained in the name of
each purchaser;
(5) require that interest earned on the account be added to the
principal and reinvested;
(6) permit assets of the separate accounts of several purchasers
to be commingled for investment; and
(7) require that on delivery of services or merchandise the
trustee shall remit to the seller the amount on deposit in the
purchaser's trust.
Upon full delivery of all services and merchandise under the
contract, if the amount on deposit in the trust is greater than the
seller's total current retail price of all services and merchandise under
the contract, the remaining amount may but need not be returned to
the individual, if any, designated by the purchaser to receive the
remainder, or to the purchaser's estate.
(i) An escrow account authorized and established under this
chapter must:
(1) be irrevocable and require the seller to deposit to escrow all
sums or property received from the purchaser;
(2) designate the seller as settlor and beneficiary;
(3) designate a trustee qualified under this chapter and authorize
the trustee to charge a reasonable fee for services;
(4) require that the escrow account be maintained in the name
of the seller and serve as a depository for all cash or other
property received by the seller to fund contracts sold by the
seller;
(5) permit the commingling of cash for investment;
(6) permit the seller to withdraw from the escrow account the
current retail value of prepaid services or merchandise delivered
under this chapter; and
(7) permit any interest earned or appreciation in value of money
or other property deposited in escrow to be paid to the seller not
more frequently than monthly, to the extent that the total value
of the escrow account after a payment under this subdivision is
not less than the current retail value of all services and
merchandise under the contracts that remain undelivered.
(j) A trust account or an escrow account established under this
chapter:
(1) must include the provisions set forth in either subsection (h)
or (i);
(2) may be included as an integral part of a seller's contract
through the execution of an adoption agreement that references
the trust account or escrow account; and
(3) is not required to be represented by a separate trust or
escrow document for each contract.
(k) The entire value of an irrevocable trust or an escrow
established under this chapter may not be considered as a resource in
determining a person's eligibility for Medicaid under IC 12-15-2-17.
(l) A contract for prepaid services or merchandise, or both,
entered into after June 30, 1997, must contain a statement that:
(1) the purchaser may revoke the contract under subsection (b)
within thirty (30) days after the contract is signed; and
(2) after thirty (30) days, the contract is irrevocable.
(m) This chapter does not prohibit a purchaser from immediately
making the trust or escrow required under this chapter irrevocable
and assigning ownership of an insurance policy used to fund a
contract to obtain favorable consideration for Medicaid,
Supplemental Security Income, or another public assistance program
under federal or state law.
As added by P.L.241-1995, SEC.7. Amended by P.L.113-1996,
SEC.2; P.L.195-1997, SEC.1; P.L.114-1999, SEC.8.
Last modified: May 27, 2006