FROM: Evelyn Gandy
      Commissioner of Insurance
 

The Insurance Department has been asked by a number of burial association owners to give consideration to several changes and modifications which they desire and propose to have made to the rules and regulations which were issued and mailed to you from this office on November 6, 1973. Careful study and thorough consideration have been given to these subjects which are more fully reviewed and discussed as follows:

    1. MINIMUM RATE SCHEDULE - Nothing contained in our regulation of November 6, 1973, was intended to convey the impression that the Commissioner of Insurance had established a mandatory standard rate to be used by any association whose policyholders services, funeral benefits and plan of operation under the revised law justify the charging of a higher premium.  Instead, this schedule merely lists and sets forth the lowest or minimum rate which would be approved by the Insurance Department for any association.

    Our study shows that a substantial number of associations are presently using this minimum rate schedule as a standard rate and can justify its continued usage. Further, no advantage has been found for this or any other so-called minimum rate schedule except the doubtful value of possibly discouraging willful intent to twist business from one association to another. The Insurance Department holds the view that any such unethical practice can and will be properly dealt with under other related insurance statutes.

    In the view of the foregoing, notice is hereby given that no change has been approved or made in the afore-mentioned minimum rate schedule which has been long-established and accepted by both the Insurance Department and burial insurance industry for many years. However, we emphasize again that each association has the option of using this minimum rate or a higher rate provided that proper justification for whichever rate is proposed is submitted to the Insurance Department.

    2.    STANDARD PROVISIONS  - A large number of associations have submitted new policy forms which have completely failed to incorporate or include the new standard provisions which are an absolutely mandatory requirement of the revised burial law after January 1, 1974. For your information and guidance in this regard, we enclose a copy of the required standard provisions which must appear in every burial policy written on and after January 1, 1974.

    There is only one exception or change which will be permitted in the Standard Provisions, and this relates to Section 8. If you wish your policy to provide for a 50% pay-off, Section 8 should read:

        "If death and/or burial occurs more than fifty (50) miles from any location of the funeral home named herein and should the beneficiary therefore deem it impractical for the association to service this contract, the association shall pay in cash to the member not less than fifty percent (50%) of the face value of the certificate to which the member is entitled or the full return of the premium paid by the member not to exceed three-fourths percent (3/4%) of the face value of the certificate, whichever amount is larger. If death and/or burial occurs within fifty (50) miles of any location of the funeral home named herein, and the member desires to use a funeral home other than the funeral home named in this contract, the association's liability shall be the full return of the premium paid by the member not to exceed the face value of the certificate."

If you wish your policy to provide for a 100% pay-off, then Section 8 should read:

    "If death and/or burial occurs more than fifty (50) miles from any location of the funeral home named herein and should the member therefore deem it impractical for the association to service this contract, the association shall pay in cash to the member not less than one-hundred percent (100%) of the face value of the certificate to which the member is entitled, which shall be in full settlement of the claim. If death and/or burial occurs within fifty (50) miles of any location of the funeral home named herein, and the member desires to use a funeral home other than the funeral home named in this contract, the association's liability shall be the full return Of the premiums paid by the member not to exceed the face value of the certificate."

No burial association will be authorized to issue a burial policy on and after January 1, 1974, unless and until it has previously submitted and received the approval of the Commissioner of Insurance of its policy forms and rates which conform and comply with the rules and regulations of our Order dated November 6, 1973, and the above-mentioned authorized changes.

ORDERED THIS THE 30th DAY OF NOVEMBER, 1973.

EVELYN GANDY
COMMISSIONER OF INSURANCE
STATE OF MISSISSIPPI
 
 

House Bill 424, Mississippi Laws of 1973, requires that all burial policies issued from and after January 1, 1974, contain the following Standard Provisions.

    (1) The association will not be responsible for casket or any other funeral supplies or expenses contracted for by anyone unless authorized by the association, subject to minimum cash settlement hereinafter provided.

    (2) When this policy has been maintained in force for not less than two (2) consecutive months, there will be a grace period of thirty (30) days for the payment of any subsequent premium, and during such period of grace, the funeral-benefit provided herein shall continue in force, provided all other conditions and stipulations herein contained shall have been complied with by such member or members.

    (3) This contract shall lapse, and the association shall not be liable for any benefits hereunder, when any premium payment on same is more than thirty (30) days in arrears, and in such event all premiums paid hereon shall be forfeited to the association.

    (4) If the contract is allowed to lapse, it may be reinstated by furnishing the association with satisfactory evidence that all members named hereon are in good health, and by the payment of the premiums required by the association, provided the policy is not over six (6) months in arrears. Acceptance of premium as of date of lapse shall reinstate the contract as of date premium is applied on lapse period.

    (5) No agent has the power on behalf of the association to modify this contract or to extend the time for payment of premium, the entire contract being that contained herein together with the application thereof.

    (6)    The association reserves the right to investigate within one year from date of application all statements made in the application as to age or condition of health, and should any of the statements made therein be found to be false, the association's liability shall be limited to the return of all premiums paid hereon, and the policyholder shall forfeit all rights to the funeral benefits. All applicants must be in good health when this contract is delivered.

    (7) This contract shall be incontestable after one (1) year, except for nonpayment of premiums.

    (8) If death and/or burial occurs more than fifty (50) miles from any location of the funeral home named herein and should the beneficiary therefore deem it impractical for the association to service this contract, the association shall pay in cash to the member not less than fifty percent (50%) of the face value of the certificate to which the member is entitled or the full return of the premium paid by the member, not to exceed three-fourths percent (3/4%) of the face value of the certificate, whichever amount is larger. Provided, however, if premium rates of not less than ten percent (10%) in excess of the rates described herein are requested by the association and approved by the commissioner, the standard provisions contained in this paragraph may provide for a cash settlement up to one hundred percent (100%) of the face value of the contract. If death and/or burial occurs within fifty (50) miles of any location of the funeral home named herein, and the member desires to use a funeral home other than the funeral home named in this contract, the association's liability shall be the full return of the premium paid by the member not to exceed the face value of the certificate.

    (9) There shall be no liability to any person or persons insured hereunder if death should occur through self-destruction  or suicide, whether sane or insane, within one (1) year from date of issuance of this contract, or within one (1) year from the date of any reinstatement. In the event of death
by Suicide or self-destruction, no return of premium shall be due under this contract.