Preneed: A Pandora's Box of Problems
The Wall Street Journal has long been viewed as a leading source of business and investment news. But last weekend, the WSJ ran a short article on preneed, and demonstrated its lack of understanding of the transaction.
The article attempts to characterize preneed as an investment, and then explores issues such as cash surrender…
Give the State Board credit for attempting to clarify how insurance assignments must be handled for compliance with Missouri laws.
For several months, the State Board has sought clarifications from MO HealthNet regarding spend-downs. On May 12th, the Board emailed to the industry new MO HealthNet guidelines for insurance assignments. One day later, the legislature…
For more than 20 years, Nebraska preneed sellers have filed an annual report that accounts for the aggregate contributions and distributions from their trust funds. The annual report form also computes the amount of income that must be accrued to the account if the seller elects to withdraw excess income from the trust. In its…
Missouri’s funeral industry has been given 30 days to submit proposals for revisions to the preneed law that went into effect last August 28th. By email, the State Board has provided the guidelines for submitting changes that will then be discussed by the Board at public hearings to be held in June. The Board has…
The Springfield Journal-Register recently reported that Illinois’ Cemetery Oversight Task Force made a recommendation to restrict preneed trusts to investing in government-backed securities. While its difficult to actually find that recommendation in the Task Force’s report, it is not a bad idea for the consumers who purchased a non-guaranteed preneed contract. However, that type of restriction would hinder funeral homes that offer guaranteed contracts.
The…
The General Laws Committee of the Missouri Senate will hold a hearing this Wednesday (April 7th) on SB 1025. This bill provides hope to many small, rural funeral directors who would rather avoid the preneed transaction and the regulatory morass of SB1.
The bill would add a new Section 208.010.5 whereby individuals seeking to…
A recent news report titled “Broken Trust” served to fan the emotions of Illinois residents who purchased a preneed contract from the Illinois Funeral Directors Association. The facts involve a 103 year old lady who purchased the contract 16 years ago, and experienced a 32% drop in the contract’s value in one year.
Within the past few years, state legislatures have significantly expanded the fiduciary duties of banks and trust companies that service death care trusts. Michigan, Indiana and Tennessee responded to cemetery trust frauds (including the Clayton Smart affair). The trend continued in Missouri and Illinois with laws aimed at funeral trusts (in response to NPS and…
In rejecting the $18 million settlement forced upon IFDA members, an Illinois Circuit Court is telling Merrill Lynch Life Agency to dig deeper into its pocket to compensate funeral homes. As reported by the Springfield Journal-Register, the $18 million represents the revenues the insurance broker received from the sale of key man insurance to…
With two of the nation’s top ten college basketball teams, Kansans are exhibiting clear symptoms of March Madness. With Topeka located between Lawrence and Manhattan, bipartisanship may be tested as tensions mount this week with the Big 12 tournament and the NCAA seedings announcement on Sunday. When Kansas legislators resume their meetings the week of…