Section 25.3 - What Requirements Apply to a Non-Model Contract or Waiver?(a) Contract requirements. The department must approve a non-model contract before you can use it. Your proposed non-model contract must: (1) contain a disclosure informing the purchaser of the funeral goods and services that will be provided under the contract, as described by subsections (b) and (c) of this section;(2) define terms used in the contract as described by subsection (d) of this section;(3) state and explain the purchaser's obligations, your obligations, and the name and obligations of the provider if you are not performing all funeral services under the contract;(4) if the provider is not the licensed seller, a statement that the provider agrees to discharge the responsibilities imposed on a funeral provider by Finance Code § RSA 154.161;(5) the impact of terms in the insurance policy on the contract if the contract is insurance-funded, as described by subsection (e) of this section;(6) disclose and explain the purchaser's cancellation rights under the contract and, if the contract is insurance-funded, the effect of insurance policy cancellation or assignment on the contract, as described by subsection (f) of this section;(7) state events of default under the contract for all parties and explain the consequences of default, as described by subsection (g) of this section;(8) state and explain the circumstances under which the responsible person may modify or change the contract at the death of the contract beneficiary, as described by subsection (h) of this section;(9) disclose and explain all payment terms under the contract and related provisions as described by subsection (i) of this section;(10) contain a section for required signatures and related notices as described by subsection (j) of this section;(11) contain a standard disclosure explaining how a purchaser can make inquiries or file complaints with specified regulatory agencies, as described by subsection (k) of this section;(12) comply with subsections (l) and (m) of this section;(13) comply with § RSA 25.4 of this title (relating to What Are the Plain Language Requirements for a Non-Model Contract or Waiver); and(14) be approved by the department as provided by § RSA 25.5 of this title (relating to How Do I Obtain Approval of a Non-Model Contract or Waiver).(b) Statement of guaranteed funeral goods and services selected. The first section of a proposed prepaid funeral benefits contract must inform the purchaser of the guaranteed funeral goods and services that you will provide under the contract, as required by Finance Code, § RSA 154.151(e). This section must appear entirely on page one of the contract exactly as set out in the model contract and in the following figure, including substantially the same formatting and spacing, except: Attached Graphic
(1) you may move specific goods and services between general description categories;(2) you may move specific goods and services from figure 7 TAC § 25.3(c)(1) to figure 7 TAC § 25.3(b), if you guarantee the price of the good or service and include any required Federal Trade Commission disclosures regarding cash advance items;(3) you may change the description of specific goods or services if the alteration does not change the intent of the description in the standard disclosure;(4) you may add other, specific funeral goods and services to the list of funeral goods and services to be provided;(5) you may delete check boxes and related text for sealing features in casket and outer burial container descriptions, for example, "gasketed", "non-gasketed", "seal", and "non-seal", if these features are not included in the funeral home's price list; and(6) if the goods and services you sell are specifically limited and constitute significantly less than those goods and services normally required for a funeral, you may substitute a simplified disclosure that the contract is for your specific goods and services only and that you do not offer any other funeral goods and services. For example, you may substitute this limited disclosure if you sell only services relating to opening and closing of the grave or unique memorials that utilize a token portion of cremains, or if you only sell limited funeral goods such as outer burial containers or caskets without furnishing funeral services.(7) The Explanation of Certain Charges language may be moved from figure 7 TAC § 25.3(c)(1) to figure 7 TAC § 25.3(b).(8) If your contract is in electronic form, the statement of guaranteed funeral goods and services selected must appear on a single screen or consecutive screens, near the beginning or top of the contract, immediately following consumer disclosures and consent required by 7 TAC § RSA 25.2(f).(c) Statement of non-guaranteed cash advance items selected. (1) The second section of a proposed prepaid funeral benefits contract must inform the purchaser of the non-guaranteed cash advance items that you will provide under the contract, as required by Finance Code, § RSA 154.1511(b). The section must appear entirely on either page one or two of the contract exactly as set out in the model contract and in the following figure, including substantially the same formatting and spacing, except; Attached Graphic
(A) you may delete the non-guaranteed cash advance items section if you do not sell cash advance items;(B) you may move the Explanation of Certain Charges language to figure 7 TAC § 25.3(b);(C) you may change the subtotal pages references if figures 7 TAC § 25.3(b) and7 TAC § 25.3(c)(1) are to be placed on the same page of the contract;(D) you may move specific goods and services from figure 7 TAC § 25.3(c)(1) to figure 7 TAC § 25.3(b) if you guarantee the price of the good or service;(E) you may change the description of specific goods or services if the alteration does not change the intent of the description in the standard disclosure;(F) you may add other specific funeral goods and services to the list of non-guaranteed funeral goods and services to be provided only through a non-model filing; and(G) if your contract is in electronic form, this section must appear on a single screen immediately following the statement of guaranteed funeral goods and services selected.(2) If you delete the statement of non-guaranteed cash advance items: (A) for a paper contract, you must include figure 7 TAC §25.3(c)(2)(B) on the bottom of page one of the contract, including substantially the same formatting and spacing; and(B) for a contract in electronic form, you must include the following figure immediately following the statement of guaranteed funeral goods and services selected: Attached Graphic
(d) Definitions. Your proposed prepaid funeral benefits contract must list, define, and use the terms "contract beneficiary", "responsible person", "provider", "purchaser", and "seller", or terms commonly understood by consumers to be equivalent, substantially as defined in a model contract. For example, you may use a combined term such as "seller/provider" if you believe the alternate term is more descriptive of your services. If your proposed contract is insurance-funded, you must also list, define, and use the terms "insurance company", "insurance policy", and "premiums" in the contract, or terms commonly understood by consumers to be equivalent, substantially as defined in the department's insurance-funded model contract. You may list, define and use additional terms if they are consistent with the requirements of § RSA 25.4 of this title.(e) General provisions. Your proposed prepaid funeral benefits contract must recognize and explain the purchaser's obligations, your obligations, and the obligations of the provider if you are not performing all funeral services under the contract, and the impact of terms in the insurance policy on the contract if the contract is insurance-funded, with respect to: (1) your obligation (and that of the provider) to furnish the guaranteed funeral goods and services selected in the contract for a cost not to exceed the total contract price applicable to the guaranteed charges at the death of the contract beneficiary, if the purchaser has fully complied with the contract and with each insurance policy, if the contract is insurance-funded;(2) your obligation (and that of the provider) to furnish the non-guaranteed cash advance items selected in the contract, if current costs are paid at the time of death or how any unallocated and remaining non-guaranteed funds will be refunded;(3) the purchaser's inability to change the selected funeral goods and services during the life of the contract unless the contract is voided and replaced with a new contract;(4) the extent to and conditions under which the purchaser may change the provider specified in the contract or, with respect to a trust-funded contract, the contract beneficiary;(5) whether the purchaser may incur tax liability for earnings under a trust-funded contract or for growth under an insurance policy if the contract is insurance-funded;(6) the extent to which you offer any warranties or guarantees or assert any specific disclaimers of warranty;(7) the prohibition on partial cancellation of or loans against the contract;(8) if the transaction may result in available funds in excess of the contract price at the time the funeral is performed, identification of who is entitled to such excess funds;(9) each party's general contractual duties under the contract and the extent to which the contract is binding on a person who assumes the rights or obligations of a party to the contract;(10) the manner in which a party must notify other parties of a change of address; and(11) if the contract is insurance-funded, the requirement that terms of the insurance policy must be consulted for information concerning the obligations of the insurance company and those of the policy owner.(f) Cancellation or assignment. Your proposed prepaid funeral benefits contract must recognize and explain: (1) with respect to a trust-funded contract: (A) the manner in and conditions under which the purchaser may cancel the contract, including the procedural requirements applicable to a cancellation, including the purchaser's obligation to request cancellation in writing on department-approved forms and your obligation to pay a refund not later than the 30th day after receipt of the purchaser's written cancellation notice;(B) the amount of the refund or other payment that you will owe the purchaser if the contract is canceled and the conditions or circumstances that may alter the refund amount; and(C) the refund or other benefits you will owe the purchaser if the contract is canceled at your request; or(2) subject to modifications or clarifications required by § RSA 25.2(a)(2) of this title (Relating to Am I Required to Use the Model Contract and Model Waiver), with respect to an insurance-funded contract: (A) the purchaser's right to assign the purchaser's interest in an insurance policy by signing a separate document;(B) the qualification that canceling the contract does not automatically cancel the insurance policy but canceling the insurance policy does cancel the contract;(C) the procedural requirements applicable to a cancellation of the contract, including the purchaser's obligation to request cancellation in writing on department-approved forms and the statutory obligation, if applicable, to pay a refund not later than the 30th day after receipt of the purchaser's written cancellation notice;(D) the purchaser's obligation to read the insurance policy to determine the conditions imposed upon cancellation and the potential amount of refund that would be due if the policy is canceled during or after the "free look" period;(E) notice and acknowledgement by the purchaser that if the insurance policy is cancelled at the purchaser's request, the surrender value may be significantly less than the premiums the purchaser paid. The disclosure must appear in the cancellation section exactly as set out in the model contract and in the following figure, without modification, including substantially the same formatting and spacing: Attached Graphic
(F) the consequences the purchaser may expect, whether refund of premium, receipt of cash surrender value, or other benefits from you or another person, if the contract is canceled at your request; and(G) the effect that loans against or withdrawal of proceeds accrued under an insurance policy will have on the contract and on price guaranties in the contract.(g) Default. Your proposed prepaid funeral benefits contract must explain events and consequences of default under the contract and under each insurance policy if the contract is insurance-funded, including: (1) the potential effect on the contract if the purchaser fails to make a payment or makes a late payment under the contract or under an insurance policy if the contract is insurance-funded;(2) the effect on the contract and on payments due if the contract beneficiary dies: (A) before the purchaser's payment obligations have been fulfilled under a trust-funded contract; or(B) if the contract is insurance-funded: (i) during a period when an insurance policy pays reduced benefits, if applicable; or(ii) before the premium obligations have been fulfilled on an insurance policy, if applicable;(3) the conditions under which you may owe a full or partial refund to the purchaser of funds received under a contract, or a full or partial abandonment of your rights to anticipated proceeds of an insurance policy if the contract is insurance-funded and proceeds are not yet received, as a consequence of your inability (or the provider's inability, if you are relying on another to perform portions of the contract) to furnish the selected funeral goods and services; and(4) a statement that the Prepaid Funeral Guaranty Fund guarantees performance of the prepaid funeral seller and the designated funeral provider, as well as associated administrative functions required by law.(h) Changes to disposition or funeral goods and services at the death of contract beneficiary. Your proposed prepaid funeral benefits contract must disclose the circumstances under which the contract may be modified by the responsible person at the death of the contract beneficiary, as required by Finance Code, § RSA 154.151(e). The disclosure must appear exactly as set out in the model contract and in the following figure, without modification, except that the phrase "fully funded" may be substituted for the phrase "fully paid" wherever it appears in this disclosure when used in an insurance-funded contract. In addition, you may use a larger type size if feasible. Attached Graphic
(i) Payment terms. Your proposed prepaid funeral benefits contract must clearly state and explain payment terms and related provisions, including: (1) how and when you will deposit a payment received under a trust-funded contract, or forward any premiums received to the insurance company for application to an insurance policy if the contract is insurance-funded;(2) with respect to a trust-funded contract, whether and the extent to which you will retain a portion of the purchaser's payments for reimbursement of your operating and selling expenses;(3) with respect to a trust-funded contract, the finance charges you will impose, if applicable, provided that the description must also comply with Finance Code, Chapter 345, and other state and federal law governing such charges;(4) subject to modifications or clarifications required by § RSA 25.2(a)(2) of this title, with respect to an insurance-funded contract: (A) the effect on the contract if insurance coverage is denied and that all premiums will be returned to the policy owner;(B) if payment terms under the insurance policy are not disclosed in the contract, a space for the purchaser to initial or sign to acknowledge that the purchaser has received written information regarding the terms governing premium payments in another document that the purchaser received at the time of sale, such as the application for insurance or the insurance policy;(C) if the information the purchaser receives regarding payment terms under an insurance policy is based on an estimate of premiums, that must be noted;(D) notice and acknowledgement by the purchaser that insurance premiums paid on the insurance policy or policies may be more or less than the total contract price, and an estimate for total premiums to be paid. The disclosure must appear in the payment terms section exactly as set out in the model contract and in the following figure, without modification, including substantially the same formatting and spacing: Attached Graphic
(E) notice and acknowledgement by the purchaser if you initially issue insurance policy(s) with an aggregate initial face value that exceed(s) the total contract price by more than 5%. The disclosure must include the total amount of the policy(s) in excess of 100% of the contract price. The disclosure must appear in the payment terms section exactly as set out in the following figure, without modification, including substantially the same formatting and spacing; and, Attached Graphic
(5) other contract provisions that materially relate to payment terms under a contract or under an insurance policy.(j) Required signatures and notices. Your proposed prepaid funeral benefits contract must contain a section for required signatures and related notices that appears in its entirety on the last page of the contract, or near the bottom of the contract if in electronic form. This section must include: (1) a list of all items that must be received or offered before the contract can be signed;(2) if required by state or federal law, cooling-off period language that includes spaces to note when and where the contract was signed;(3) notice that the purchaser will receive a copy of the contract;(4) notice that the purchaser is required to be provided an informational brochure for contracts sold after June 1, 2010;(5) the Department's prepaid funeral contract informational website address;(6) if the contract is insurance-funded: (A) notice that the policy owner will receive a copy of the insurance policy from the insurance company; or(B) if the insurance company is not legally required to deliver a copy of the insurance policy to the policy owner, notice that the policy owner may request a copy of the insurance policy from the insurance company;(7) spaces for: (A) the purchaser's printed name, mailing address, telephone number, social security number (if required), and signature line;(B) if you are not directly providing the funeral goods and services, the printed name, mailing address, and telephone number of the provider, and spaces for the printed name and signature of the authorized officer or agent signing on behalf of the provider;(C) your printed name, mailing address, and telephone number, and spaces for the printed name and signature of the authorized officer or agent signing on your behalf; and(D) the printed name, mailing address, and date of birth of the sole individual designated as contract beneficiary; and(8) other provisions, party identifications, or certifications legally required for valid execution of the contract.(k) Inquiries and complaints notice. Your proposed prepaid funeral benefits contract must disclose how a purchaser, potential purchaser or consumer can make consumer inquiries and complaints to the department as required by Finance Code, § RSA 11.307(a), and § RSA 25.41 of this title (relating to How Do I Provide Information to Consumers on How to File a Complaint and What Action Must I Take When I Receive a Complaint?), and to other specified state regulatory agencies with appropriate jurisdiction. (1) This disclosure must appear exactly as set out in the relevant model contract, including the names and contact information for each regulatory agency, without modification, and will vary in context depending on whether the proposed contract is trust-funded or insurance-funded. The model disclosures for both trust-funded and insurance-funded contracts appear in: Attached Graphic
(2) If the disclosure does not appear at the bottom of the last page of the contract following the signatures of the parties, it must be placed at the top or bottom of a preceding page and be separated from other contract text by at least 1/2 inches of white space. If the contract is in electronic form, the disclosure must appear immediately preceding the area a purchaser can sign the contract. The disclosure may not be placed on a page by itself.(l) Additional requirements. A proposed prepaid funeral benefits contract must also contain: (1) page numbers, unless in an electronic form that does not contain pages;(2) a document title that discloses the contract is for the purpose of prearranging a funeral, such as "Prepaid Funeral Benefits Contract";(3) a distinguishing form number or name;(4) your permit number; and(5) a space for the contract number on at least one of the contract pages.(m) Your proposed non-model contract or waiver form may contain: (1) additional contract clauses that are fair to consumers in light of the purpose of Finance Code, Chapter 154; and(2) additional consumer disclosures that you determine: (A) will assist the purchaser in understanding the transaction; or(B) are required by other state or federal law for the type of transaction the contract represents.(n) Electronic contract requirements. A proposed non-model contract in electronic form must contain all consumer disclosures required under Electronic Signatures in Global and National Commerce Act, RSA 7001, before any other provision and may be on a separate screen.7 Tex. Admin. Code § 25.3
The provisions of this §25.3 adopted to be effective March 14, 2002, 27 TexReg 1706; amended to be effective January 7, 2010, 35 TexReg 204; amended to be effective July 8, 2010, 35 TexReg 5803; amended to be effective November 4, 2010, 35 TexReg 9696; amended to be effective September 8, 2011, 36 TexReg 5668; amended to be effective January 5, 2012, 36 TexReg 9284; Amended by Texas Register, Volume 41, Number 45, November 4, 2016, TexReg 8814, eff. 11/10/2016