Section 27-17A-3

Funding of preneed contracts; premium payments; commissions; preneed seller as beneficiary or assignee.

(a) Nothing in this chapter shall be construed to prohibit the funding of preneed contracts with multiple insurance or annuity contracts. Life insurance and annuity contracts used to fund preneed contracts shall conform with the provisions of this title as they relate to life insurance and annuities and shall cover not less than the initial retail price of the preneed contract.

(b) The initial premium payment for a life insurance policy or annuity contract shall be made payable to the issuing insurance company and the preneed seller shall remit the payment to the insurance company within 10 business days after the insurance application is signed by the parties. If a preneed contract provides for installment payments, each premium payment shall be made payable to the insurance company and, if collected by the preneed seller, shall be remitted to the insurance company within 10 business days after receipt by the preneed seller.

(c) Nothing in this chapter shall prohibit a seller, or any other person, from receiving commissions earned and payable in regard to funding preneed contracts with life insurance or annuity contracts, provided the seller or other person holds a valid insurance producer license in this state and is appointed by the insurance company paying the commission.

(d) A preneed seller may be identified as the beneficiary or assignee of the death benefit proceeds of a life insurance policy or annuity contract sold as a future funding mechanism for a preneed contract, but may not be the owner of the policy or annuity contract or exercise any ownership rights in the policy or annuity. If the preneed contract is cancelled before or after the death of the funeral beneficiary, the preneed seller shall cancel and relinquish any assignment of benefits or beneficiary status under the policy or annuity contract, and deliver the policy or contract, if in the custody of the preneed seller, to the policy owner or his or her legal representative.

(Act 2002-74, p. 221, §1; Act 2014-216, p. 653, §1.)