| Arkansas Prepaid Funeral Benefits Law |
| §
23-40-102 |
Purpose |
| The purpose of this chapter is to provide for the regulation of the sale of
prepaid funeral benefits by the Insurance Commissioner. |
| §
23-40-103 |
Definitions |
| As used in this chapter, unless the context otherwise requires: |
| (1) |
"Cash
accommodation items" means flowers, honorariums, death certificates, sales taxes,
grave opening and closing, cemetery charges, and other items incidental to the funeral and
disposition of the beneficiary which are to be furnished or provided by a "third
party" at the time of death; |
| (2) |
"Contract
price" means the aggregate moneys to be paid and the aggregate stated value of all
other direct or indirect consideration to be assigned by purchasers of prepaid funeral
benefits as provided in the contract, exclusive of any finance charge; |
| (3) |
"Contract
proceeds" means the portion of the contract price collected by the seller from a
contract for the sale of prepaid funeral benefits; |
| (4) |
"Licensee"
or "permittee" means a person holding a valid permit or license issued pursuant
to this chapter; |
| (5) |
"Liquid
investments" means investments which can be sold at cost or greater, liquidated
without penalty, and collected within five (5) banking days; |
| (6) |
"Net
investment income" means: |
|
(A) |
All revenue and
earnings of the trust fund, including, but not limited to interest, dividends, and capital
gains; minus |
|
(B) |
Investment expenses,
trustee's fees, capital losses, and all revenue and earnings on cash accommodation funds; |
| (7) |
"Prearrangement"
means an arrangement whereby a person, for himself or on behalf of some other person,
makes arrangement for funeral and burial services prior to the death of such person,
without consideration and without an agreement or itemization specifying any particular
service or merchandise, or the cost thereof, through the assignment or transfer, including
such conditions as the assignor or transferor may choose to impose, of ownership to a
licensee of an insurance policy or annuity contract, or proceeds thereof, or by the
designation of a licensee as beneficiary of any such insurance policy or annuity contract.
An assignment of an insurance policy or annuity or the proceeds thereof to a funeral home
or the designation of a funeral home as beneficiary as described herein is not a prepaid
funeral benefits contract. |
| (8) |
"Seller"
means the organization selling prepaid funeral benefits or owning any interest in any
contract for prepaid funeral benefits pursuant to this chapter; |
| (9) |
"Surplus"
means the funds or other property in excess of the undistributed net investment income and
aggregate contract proceeds held in the trust fund; |
| (10) |
"Trustee"
means a state or national bank or savings and loan association in this state, or, in the
reasonable discretion of the Insurance Commissioner upon such terms and conditions as he
may require, a "securities brokerage firm" licensed and in good standing with
appropriate state and federal regulatory authorities. |
| (11) |
"Net
worth" means the difference between the applicant's total assets and total
liabilities as reflected in a balance sheet prepared in accordance with accounting
principles and procedures approved by the Insurance Commissioner. |
| (12) |
"Prepaid
funeral benefits contract" or "prepaid contract" means a contract or
agreement for the prepayment and sale in this state of funeral services or funeral
merchandise, including caskets, grave vaults, and all other articles of merchandise and
services incidental to funeral services, at an agreed upon price, to be delivered at an
undetermined future date depending upon the death of the contract beneficiary. It does not
include a prearrangement. |
| (13) |
"Contract
beneficiary" means any natural person designated in a prepaid funeral benefits
contract upon whose death funeral services and/or funeral merchandise shall be performed,
provided, or delivered. |
| §
23-40-104 |
Insurance Code
Not Affected |
| Nothing in
this chapter shall apply to any licensed insurance company or alter or affect any
provisions of the Arkansas Insurance Code. |
| §
23-40-105 |
Burial
Associations Exempted |
| Nothing in
this chapter shall apply to organizations or associations operating in this state as
burial associations pursuant to Section 23-78-101 et seq. |
| §
23-40-106 |
Penalties |
| (a) |
Any officer,
director, agent, or employee of any organization subject to the terms of this chapter who
makes, or attempts to make, any contract in violation of this chapter, or refuses to allow
an inspection of the organization's records, or who violates any other provisions of this
chapter, shall be punished by a fine of not less than one hundred dollars ($100) and not
more than five hundred dollars ($500), or by imprisonment in the county jail for not less
than one (1) month and not more than six (6) months, or by both fine and imprisonment. |
| (b) |
Each violation of any
provision of this chapter shall be deemed a separate offense and prosecuted individually. |
| §
23-40-107 |
Division of
Prepaid Funeral Benefits |
| The
Insurance Commissioner shall be responsible for the regulation of the sale of prepaid
funeral benefits and there is hereby established, within the State Insurance Department,
the Division of Prepaid Funeral Benefits. This division shall be funded annually by the
fees required to be paid by organizations subject to this chapter, which shall be placed
in trust and disbursed pursuant to this chapter. |
| (a) |
There is hereby
established on the books of the Treasurer of State, the Auditor of State and the Chief
Fiscal Officer of the State a fund to be known as the 'State Insurance Department Prepaid
Trust Fund' to be used to pay the expenses of the State Insurance Department in the
discharge of its regulation of prepaid funeral benefits contracts. |
| (b) |
No money shall be
appropriated from this fund for any purpose other than to pay for personal services,
operating expenses, maintenance and operations, and support of and improvements to the
Division of Prepaid Funeral Benefits of the State Insurance Department. |
| (c) |
The fund established
pursuant to this section shall be administered, disbursed, and invested under the
direction of the Insurance Commissioner and the Treasurer of the State. |
| (d) |
All income derived
through the investment of the State Insurance Department Prepaid Trust Fund, including,
but not limited to, interest and dividends, shall be credited as investment income to the
State Insurance Department Prepaid Trust Fund. |
| (e) |
All income derived
through grants, refunds, and gifts to the State Insurance Department Prepaid Trust Fund
shall be credited as income to the State Insurance Department Prepaid Trust Fund. |
| (f) |
All moneys deposited
to the aforementioned fund shall not be subject to any deduction, tax, levy, or any other
type of assessment, except as provided in this chapter. |
| (g) |
All fees required to
be paid by licensees pursuant to this chapter shall be deposited in the State Insurance
Department Prepaid Trust Fund for the support, operation, and maintenance of the Division
of Prepaid Funeral Benefits of the State Insurance Department and, when paid into the
State Treasury by the Insurance Commissioner, shall be maintained by the State Treasurer
as the State Insurance Department Prepaid Trust Fund, separate from all other funds, and
available only for the payment of the expenses of the Division of Prepaid Funeral Benefits
of the State Insurance Department. |
| (h) |
The Auditor of State
shall, upon proper voucher from the Insurance Commissioner, issue his warrant on the
Treasurer of State in payment of all salaries and other expenses incurred by the Division
of Prepaid Funeral Benefits of the State Insurance Department in the administration of
this chapter. |
| (i) |
The Insurance
Commissioner shall, however, at the end of each fiscal year cause to be transferred from
the State Insurance Department Prepaid Trust Fund to the General Revenue Fund Account of
the State Apportionment Fund ten percent (10%) of the fees collected under this chapter. |
