Dear Counselor

The Missouri Funeral Directors Association recently warned of a proposed regulation that would affect funeral homes when families name us as beneficiary of a life insurance policy. Can you explain the issue, and why the need for the regulation.

Missouri’s SB1 clearly regulates insurance sales that are made in conjunction with a preneed contract. However, the State Board staff is uncertain how to treat the situation where the funeral home is named as beneficiary of an existing insurance policy. The staff has asked the State Board to treat the situation as a preneed contract, and their reasoning is that a contract has formed when the funeral director is put on notice of the policy designation, and agrees to provide a funeral in exchange for the insurance proceeds. That contract is for a funeral arrangement that is not immediately needed, and therefore falls within the definition set out in Section 436.504(7).

While there is a basis for arguing against this transaction falling under Chapter 436, the staff’s concerns are not without merit. Many funeral homes accept the insurance policy without documenting the “agreement”. That “agreement” is usually that the funeral home will provide the proceeds to the final costs, and return the excess to the family. To protect both the family and the funeral home, the acceptance of an insurance policy designation (or assignment) should be documented with a written contract (which provides for a return of the proceeds if a different funeral home is used). The contract should also spell out the promises (if any) regarding prices.

Bill Stalter answers our questions for educational purposes only. It is The Dead Beat’s intent to give the reader general information about legal issues, not to provide legal advice. If a reader needs legal advice, he or she should hire an attorney. Reading The Dead Beat should not be used as a substitute for legal advice from an attorney. When Bill provides legal advice he does so for Stalter Legal Services in Overland Park, Kansas. Bill also provides consulting services through Preneed Resource Consultants, which can be found at www.preneedresource.com.

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