SB 1070

SENATE BILL NO. 1070
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 2080 (MCL 500.2080), as amended by
2023 PA 167.
the people of the state of michigan enact:
Sec. 2080. (1) A life or accident insurer
authorized to do business in this state shall not own, manage, supervise,
operate, or maintain a funeral establishment or permit its officers, agents, or
employees to own or maintain a funeral establishment.
(2) Except as
otherwise provided in subsection (6), a life insurance company, a sick or
funeral benefit company, or a company, corporation, or association engaged in a
similar business shall not contract or agree with a funeral director,
undertaker, or mortuary to the effect that the funeral director, undertaker, or
mortuary conducts the funeral of a person insured by the company, corporation,
or association.
(3) A funeral
establishment, cemetery, or seller must not be licensed as an insurance
producer under chapter 12 other than as a limited licensee under this
subsection and chapter 12. A funeral establishment, cemetery, or seller must
not be a limited life insurance producer unless the funeral establishment,
cemetery, or seller provides a written assurance to the director at the time of
application for the limited licensure and with each license renewal that he or she the funeral
establishment, cemetery, or seller has read and understands the
conditions contained in subsection (9) and agrees to comply with those
conditions. A person licensed as a limited life insurance producer under this
subsection and chapter 12 is authorized and licensed to sell only an associated
life insurance policy or annuity contract and is not authorized or licensed to
sell any other type of insurance policy or annuity contract. A person licensed
as a limited life insurance producer under this subsection and chapter 12 to
sell associated life insurance policies or annuity contracts shall not sell
cemetery goods or services or funeral goods or services unless all of the
conditions provided in subsection (9) are met. A person licensed as a life
insurance producer, other than a limited life insurance producer, shall not
sell cemetery goods or services or funeral goods or services or be associated
with a funeral establishment, cemetery, or seller. Notwithstanding any other
provision in this act, a funeral establishment, cemetery, or seller may advise
customers or potential customers of the availability of life insurance, the
proceeds of which may be assigned under subsection (6), and may provide
application forms and other information regarding that life insurance. If an
application form is provided, the funeral establishment, cemetery, or seller
shall also provide to the person a list annually prepared by the director that
lists the life insurance companies that offer Michigan associated life
insurance policies or annuity contracts. The list must include the name,
address, and telephone number of a producer for each of the life insurance
companies listed. The list also must include a statement that a person who is
insured under any life insurance policy or annuity contract may assign all or a
portion of the proceeds, not to exceed the amount provided in subsection
(6)(g), of the existing life insurance policy or annuity contract for the
payment of funeral services or goods or cemetery services or goods to any
funeral establishment, cemetery, or seller that has accepted any other
assignment of an associated life insurance policy or annuity contract during
that calendar year. The funeral establishment, cemetery, or seller shall accept
an assignment of the proceeds from any associated or nonassociated life
insurance policy or annuity contract under subsection (6), and this requirement
on the funeral establishment, cemetery, or seller must be set forth in the
statement prepared by the director. The assignor or the person or persons
legally entitled to make funeral arrangements for the person whose life was
insured may contract with the funeral establishment, cemetery, or seller of his or her the assignor's
or person's choice for the rendering of the funeral goods or services or
cemetery goods or services. Except as otherwise provided in this subsection,
each associated life insurance policy or annuity contract delivered or issued
for delivery in this state must have a death benefit that is sufficient to
cover the initial contract price of the cemetery goods or services or funeral
goods or services. However, a life insurer may provide an associated life
insurance policy or annuity contract with a limited death benefit to an insured
who does not meet insurance requirements for a policy that provides immediate
full coverage or who chooses not to answer medical questions required for a
policy that provides immediate full coverage. An associated life insurance
policy or annuity contract with a limited death benefit must disclose in
boldfaced type that the death benefit will not be sufficient to cover the
initial contract price for the cemetery goods and services or funeral goods and
services for a period of up to 2 years if the premium is not paid in full and
that during this period the price for those goods and services may increase at
a rate higher than the increase in the Consumer Price Index for this period.
(4) A person must
not be designated as the beneficiary in any policy of life or accident
insurance under which the beneficiary, directly or indirectly, must, in return
for all or a part of the proceeds of the policy of insurance, furnish cemetery
services or goods or funeral services or goods in connection with the policy.
(5) Except as
otherwise provided in subsection (6), a life or accident or sick or funeral
benefit company, or any other person, shall not offer or furnish goods or
services or anything but money to its insureds or the insured's heirs,
representatives, attorneys, relatives, associates, or assigns in connection
with, or by way of encumbrance, assignment, payment, settlement, satisfaction,
discharge, or release of, an insurance policy. However, this subsection does
not prohibit a company, corporation, or association from furnishing medical,
surgical, or hospital service.
(6) Notwithstanding
any other provision in this act, a life insurer may write a life insurance
policy or annuity contract that is subject to an assignment of the proceeds of
the insurance policy or annuity contract as payment for cemetery services or
goods or funeral services or goods as provided in this subsection regardless of
the relationship between the life insurer and the assignee. An assignment of
the proceeds of the insurance policy or annuity contract under this subsection
must be in writing on a form approved by the director. A predeath assignment of
the proceeds of a life insurance policy or annuity contract as payment for
cemetery services or goods or funeral services or goods is void unless all of
the following conditions and criteria are met:
(a) The assignment
is an inseparable part of the contract for the cemetery services or goods or
funeral services or goods for which the assigned proceeds serve as payment.
(b) The assignment
is revocable by the assignor, the assignor's successor, or if the assignor is
the insured, the representative of the insured's estate before the cemetery
services or goods or funeral services or goods are provided.
(c) The contract
for funeral services or goods or cemetery services or goods and the assignment
provide that on revocation of the assignment, the contract for the cemetery
services or goods or funeral services or goods is revoked and cemetery services
or goods or funeral services or goods may be obtained from any cemetery,
funeral establishment, or seller.
(d) The assignment
contains the following disclosure in boldfaced type:
"This
assignment may be revoked by the assignor or assignor's successor or, if the
assignor is also the insured and deceased, by the representative of the
insured's estate before the cemetery services or goods or funeral services or
goods are provided. If the assignment is revoked, the death benefit under the
life insurance policy or annuity contract will be paid in accordance with the
beneficiary designation under the insurance policy or annuity contract."
(e) The assignment
provides for all of the following:
(i) That the actual price of the cemetery
services or goods or funeral services or goods delivered at the time of death
may be more than or less than the price set forth in the assignment.
(ii) For the assignment of an associated life
insurance policy or annuity contract, that any increase in the price of the
cemetery services or goods or funeral services or goods will not exceed the
ultimate death benefit under the life insurance policy or annuity contract.
This requirement does not apply to an insurance policy or annuity contract with
a limited death benefit during the period that the limited death benefit is in
effect. During this period, the beneficiary and the seller are not obligated to
fulfill the terms of the contract for the cemetery services or goods or funeral
services or goods for which the assigned proceeds serve as payment and the
assignment of the associated life insurance policy or annuity contract may be
revoked.
(iii) For the assignment of a nonassociated
life insurance policy or annuity contract, that any increase in the price of
the cemetery services or goods or the funeral services or goods must not exceed
the Consumer Price Index or the retail price list in effect when the death
occurs, whichever is less.
(iv) That if the ultimate death benefit under
the life insurance policy or annuity contract exceeds the price of the cemetery
services or goods or funeral services or goods at the time of performance, the
excess amount must be distributed to the beneficiary designated under the life
insurance policy or annuity contract or the insured's estate.
(v) That any addition to or modification of
the contract for cemetery services or goods or funeral services or goods does
not revoke the assignment or the contract for the cemetery services or goods or
funeral services or goods that are not affected by the addition or modification
for which the assigned proceeds are payment unless the assignment is revoked.
(f) The assignment
is limited to that portion of the proceeds of the life insurance policy or
annuity contract that is needed to pay for the cemetery services or goods or
funeral services or goods for which the assignor has contracted.
(g) For an
associated life insurance policy or annuity contract, the death benefit of the
life insurance policy or annuity contract subject to the assignment does not
exceed $12,720.00 when the first premium payment is made on the life insurance
policy or annuity contract. For a nonassociated life insurance policy or
annuity contract, the initial amount of proceeds assigned does not exceed
$12,720.00. The maximum amounts in this subdivision must be adjusted annually
in accordance with the Consumer Price Index.
(h) The assignment
must contain the dispute resolution rights in subsection (8). After the death
of the insured but before the cemetery services or goods or funeral services or
goods are provided, the funeral establishment, cemetery, or seller shall provide
to a representative of the insured's estate a separate document entitled,
"dispute resolution disclosure statement," that must clearly set
forth the dispute resolution rights in subsection (8). The dispute resolution
disclosure statement must be filed with the director and is considered approved
unless disapproved within 30 days after the submission. The language used to
set forth the dispute resolution rights in subsection (8) must be written in a
manner that is understood by a person of ordinary intelligence.
(i) The assignor
and not the assignee is responsible for making the premium payments due on the
life insurance policy or annuity contract. This subdivision does not apply to
an insurance producer when acting as a fiduciary under section 1207.
(j) After the death
of the insured but before the cemetery services or goods or funeral services or
goods are provided, the representative of the insured's estate is provided with
a current price list for the cemetery services or goods or funeral services or
goods provided under the assignment.
(k) At the time the
assignment is made, the assignee complies with the price disclosure rules of
the Federal Trade Commission prescribed in 16 CFR part 453 whether or not the
rules by their own terms apply to the offering.
(l) At the time the assignment is made, the
assignor certifies that the insured does not have in effect other life
insurance policies or annuity contracts that have been assigned as payment for
cemetery goods or services or funeral goods or services that together with the
additional assignment would have an aggregate face value in excess of the
limitation provided in subdivision (g).
(m) For the
assignment of a nonassociated life insurance policy or annuity contract, the
assignment complies with both of the following:
(i) The assignment is sufficient to cover
the initial contract price of the cemetery goods or services or funeral goods
or services.
(ii) The assignment provides that any
increase in the price of the cemetery services or goods or the funeral services
or goods must not exceed the Consumer Price Index or the retail price list in
effect when the death occurs, whichever is less.
(7) An insurer or
an insurance producer shall not make a false or misleading statement, oral or
written, regarding an assignment subject to subsection (6) or regarding the
rights or obligations of any party or prospective party to the assignment. An
insurer or an insurance producer shall not advertise or promote an assignment
subject to subsection (6) in a manner that is false, misleading, deceptive, or
unfair. The director shall promulgate rules regulating the solicitation of
plans promoting assignments subject to subsection (6) to protect against
solicitations that are intimidating, vexatious, fraudulent, or misleading, or
which take unfair advantage of a person's ignorance or emotional vulnerability.
(8) After cemetery
services or goods or funeral services or goods that are subject to an
assignment under this section are provided, the funeral establishment,
cemetery, or seller shall provide to a representative of the insured's estate a
statement to be signed by the representative of the insured's estate
authorizing the release of the assignment proceeds for the payment of the
cemetery services or goods or funeral services or goods. The insurer shall
release to the funeral establishment, cemetery, or seller the assignment
proceeds on receipt of the authorization statement signed by a representative
of the insured's estate. If a representative of the insured's estate fails to
sign the authorization statement, all of the following apply:
(a) The funeral
establishment, cemetery, or seller shall provide the representative of the
insured's estate with a dispute resolution notice, a copy of which is to be
sent to the insurer and the director that states all of the following:
(i) That the funeral establishment,
cemetery, or seller has provided the cemetery services or goods or funeral
services or goods.
(ii) That a representative of the insured's
estate has refused to authorize the insurer to release the assignment proceeds
for the payment of the cemetery services or goods or funeral services or goods.
(iii) That a representative of the insured's
estate may seek arbitration to resolve the payment dispute.
(b) On the receipt
of the dispute resolution notice described in subdivision (a), the insurer
shall retain the assignment proceeds for 30 days. The insurer shall release the
assignment proceeds to the funeral establishment, cemetery, or seller if after
the expiration of the 30 days the insurer is not informed that arbitration
proceedings have been commenced, or pursuant to the award of the arbitrator.
(c) The funeral
establishment, cemetery, seller, or a representative of the insured's estate
may commence arbitration proceedings to determine the disposition of the
assignment proceeds. Arbitration must be conducted under the rules and
procedures of the American Arbitration Association. Expenses of the arbitration
must be shared equally by the insured's estate and the assignee unless
otherwise ordered by the arbitrator.
(d) This subsection
does not limit the right of any party involved in the payment dispute to seek
other recourse permitted by law.
(9) A life
insurance producer shall not sell or solicit the sale of a life insurance
policy or annuity contract with the intention of having the purchaser assign
the proceeds of the policy or contract to a funeral establishment, cemetery, or
seller with which the producer is associated unless all of the following
conditions are met:
(a) The producer
discloses in writing to the purchaser the nature of his or her the producer's
association with the funeral establishment, cemetery, or seller and that
both the funeral establishment, cemetery, or seller and the producer will or
may profit from the transaction, if that is the case.
(b) A funeral
establishment, cemetery, or seller that accepts assignments under subsection
(6) also offers to sell or provide cemetery goods or services or funeral goods
or funeral services under prepaid funeral contracts as provided in the prepaid
funeral and cemetery sales act, 1986 PA 255, MCL 328.211 to 328.235, or under
the trust provisions of the cemetery regulation act, 1968 PA 251, MCL 456.521
to 456.543.
(c) If the
contemplated assignment is to be made to pay the cost of cemetery goods or
services or funeral goods or funeral services, the producer discloses in
writing to the purchaser that the cemetery goods or services or funeral goods
or services may also be purchased before death by making payment directly to a
funeral establishment, cemetery, or seller who will hold funds in escrow for
the benefit of the purchaser under the prepaid funeral and cemetery sales act,
1986 PA 255, MCL 328.211 to 328.235, or in trust under the cemetery regulation
act, 1968 PA 251, MCL 456.521 to 456.543. The written disclosure must also
state that on cancellation of the prepaid funeral contract, the purchaser is
entitled to a refund of at least 90% of the principal and income earned.
(d) The sale of
cemetery goods or services or funeral goods or services is not conditioned on
the purchaser buying or agreeing to buy a life insurance policy or annuity
contract or on the assignment of the proceeds of the policy or contract to the
funeral establishment, cemetery, or seller.
(e) The sale of a
life insurance policy or annuity contract is not conditioned on the purchaser
buying or agreeing to buy cemetery goods or services or funeral goods or
services from the funeral establishment, cemetery, or seller with which the
producer is associated or on the assignment of the proceeds of the policy or
contract to the funeral establishment, cemetery, or seller.
(f) A discount from
the current price of cemetery goods or services or funeral goods or services is
not offered as an inducement to purchase or assign a life insurance policy or
annuity contract.
(g) If the life
insurance policy or annuity contract sold by the producer is canceled by the
purchaser within 10 days after the receipt of the policy or annuity contract, a
full refund of all premiums is paid to the purchaser.
(h) The producer
discloses in writing to the purchaser that the funeral establishment, cemetery,
or seller with which the producer is associated will accept assignments of life
insurance policies or annuity contracts sold by any other licensed producer.
(10) The director
or any other person, in order to force compliance with subsection (6) or (7),
may bring an action in a circuit court in any county in which the assignee or
insurance producer or any other person has solicited or sold a life insurance
policy or annuity contract that is assigned under subsection (6), whether or
not that person has purchased the life insurance policy or annuity contract or
is personally aggrieved by a violation of this section. The court may award
damages and issue equitable orders in accordance with the Michigan court rules
to restrain conduct in violation of this section.
(11) A person that
violates this section is guilty of a misdemeanor, punishable on conviction by a
fine of not more than $1,000.00 or by imprisonment for not more than 6 months,
or both, within the discretion of the courts. Each violation is a separate offense.
(12) In addition to
the penalty provided in subsection (11), if, after a hearing conducted under
the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328,
the director determines a person has violated this section, the director may order
the person to pay a civil fine of not more than $10,000.00 for each violation
and may also impose other sanctions provided under chapter 12. The money
collected under this subsection must be deposited in the funeral consumers
education and advocacy fund. The funeral consumers education and advocacy fund
is created within the department. The director shall administer the fund. The
money in the fund must be used to do both of the following:
(a) To promote the
education of consumers concerning the prearrangement and purchase of cemetery
or funeral services or goods through the purchase and assignment of life
insurance or annuity contracts.
(b) To provide
legal assistance to persons who were injured as a result of a violation of this
section.
(13) For purposes
of this section, a life insurance producer is associated with a funeral
establishment, cemetery, or seller if any of the following apply:
(a) The producer is
a funeral establishment, cemetery, or seller.
(b) The producer
owns an interest, directly or indirectly, in a corporation or other entity that
holds an interest in a funeral establishment, cemetery, or seller.
(c) The producer is
an officer, employee, or agent of a funeral establishment, cemetery, or seller.
(d) The producer is
an officer, employee, or agent of a corporation or other entity that holds an
interest, either directly or indirectly, in a funeral establishment, cemetery,
or seller, or in a corporation or other entity that holds an interest, directly
or indirectly, in a corporation or other entity that holds an interest in a
funeral establishment, cemetery, or seller.
(14) As used in
this section:
(a)
"Associated life insurance policy or annuity contract" means a life
insurance policy or annuity contract that is marketed, designed, and intended
to be assigned as payment for cemetery goods or services or funeral goods or
services.
(b)
"Casket" means any box or container consisting of 1 or more parts in
which a dead human body is placed before interment, entombment, or cremation
that may or may not be permanently interred, entombed, or cremated with the
dead human body. Casket includes a permanent interment or entombment receptacle
designed or intended for use without a cemetery burial vault or other outside
container.
(c)
"Catafalque" means an ornamental or decorative object or structure
placed beneath, over, or around a casket, vault, or a dead human body before
final disposition of the dead human body.
(d)
"Cemetery" means that term as defined in section 2 of the cemetery
regulation act, 1968 PA 251, MCL 456.522, regardless of whether the cemetery is
regulated under the cemetery regulation act, 1968 PA 251, MCL 456.521 to
456.543, or an officer, agent, or employee of a cemetery.
(e) "Cemetery
burial vault or other outside container" means a box or container used
solely at the place of interment to permanently surround or enclose a casket
and to support the earth above the casket after burial.
(f) "Cemetery
goods" means land or interests in land, crypts, lawn crypts, mausoleum
crypts, or niches that are sold by a cemetery. Cemetery goods also include
cemetery burial vaults or other outside containers, markers, monuments, urns,
and merchandise items used for the purpose of memorializing a decedent and
placed on or in proximity to a place of interment or entombment of a casket,
catafalque, or vault or to a place of inurnment that are sold by a cemetery.
(g) "Cemetery
services" means those services customarily performed by a cemetery.
(h)
"Combination unit" means any product consisting of a unit or a series
of units designed or intended to be used together as both a casket and as a
permanent burial receptacle.
(i) "Consumer
Price Index" means the annual average percentage increase in the Detroit
Consumer Price Index for all items for the prior 12-month period as reported by
the United States Department of Labor and as certified by the director.
(j) "Funeral
establishment" means a funeral establishment or a person that is engaged
in the practice of mortuary science as those terms are defined in section 1801
of the occupational code, 1980 PA 299, MCL 339.1801, or an officer, agent, or employee
of the funeral establishment or person.
(k) "Funeral
goods" means items of merchandise that will be used in connection with a
funeral or an alternative to a funeral or final disposition of human remains
including, but not limited to, caskets, other burial containers, combination
units, and catafalques. Funeral goods does not include cemetery goods.
(l) "Funeral services" means
services customarily performed by a person who is licensed under article 18 of
the occupational code, 1980 PA 299, MCL 339.1801 to 339.1812. 339.1811. Funeral
services includes, but is not limited to, care of human remains, embalming,
preparation of human remains for final disposition, professional services
relating to a funeral or an alternative to a funeral or final disposition of
human remains, transportation of human remains, limousine services, use of
facilities or equipment for viewing human remains, visitation, memorial
services, or services used in connection with a funeral or alternative to a
funeral, coordinating or conducting funeral rites or ceremonies, and other
services provided in connection with a funeral, alternative to a funeral, or
final disposition of human remains.
(m) "Limited
death benefit" means the sum payable on the insured's death during not
more than the first 2 years that an associated life insurance policy or annuity
contract is in effect that is less than the amount necessary to cover the
initial contract price of cemetery goods and services or funeral goods and
services, but that provides for a minimum benefit as follows:
(i) During the first year of the contract,
not less than 25% of the initial contract price of cemetery goods and services
or funeral goods and services.
(ii) During the second year of the contract,
not less than 50% of the initial contract price of cemetery goods and services
or funeral goods and services.
(n)
"Nonassociated life insurance policy or annuity contract" means a
life insurance policy or annuity contract that is not marketed to be assigned,
designed to be assigned, or intended to be assigned as payment for cemetery
goods or services or funeral goods or services.
(o)
"Representative of the insured's estate" means the person or persons
legally entitled to make the funeral arrangements for the person whose life was
insured.
(p)
"Seller" means a person that offers to sell cemetery goods or
services or funeral goods or services or an agent, officer, or employee of the
person.
Enacting section 1. This amendatory act does not take
effect unless Senate Bill No. 1060 of the 103rd Legislature is enacted into
law.