A “funeral insurance contract” is a life policy embodying an agreement, for a valuable consideration, to embalm or dispose of, or expressly to procure or pay or to provide funds for, in whole or in part, the embalming or disposal of the remains of any person living at the time of the issuance of such policy.
Life and Disability InsuranceBurial Contracts
Section § 10240
A funeral insurance contract is a type of life insurance policy. It involves an agreement to pay for, arrange, or cover the costs of embalming or disposing of a person's remains when they pass away. The policy is established while the individual is still alive, requiring a financial contribution from them.
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Section § 10242
This law applies to all funeral insurance policies that are either issued or provided to people living in California. It also applies to any insurance company that issues or provides these funeral insurance contracts within the state.
The provisions of this chapter shall apply to all funeral insurance contracts issued or delivered in this State upon the life of any person in this State and to any insurer issuing or delivering such contracts in this State upon the life of any person in this State.
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Section § 10244
This law outlines specific rules for funeral insurance contracts in California. These contracts must include certain provisions to ensure clarity and fairness to the insured.
First, after three months of payments, policyholders have at least 30 days to pay future premiums, with interest possible but limited. Policies remain active during this grace period, but unpaid premiums plus interest may be deducted if a claim arises.
Second, policies are generally incontestable after two years, except in cases of suicide, nonpayment, or military-related events.
Third, the policy, application, and any attached rider form the whole contract, and nothing else can be included by reference.
Fourth, statements by the insured are treated as representations, unless proven fraudulent. Fifth, any discrepancy in the insured's age affects payouts based on what the premiums would cover at the correct age.
Sixth, insurers must verify funeral services expenses before paying funeral directors, with specific rules if proof isn't provided timely.
Seventh, policyholders can change their designated funeral director anytime. Lastly, any possibility of extra payments beyond the stated premium must be clearly indicated.
Anything in this code or elsewhere to the contrary notwithstanding, no funeral insurance contract shall be issued or delivered in this State upon the life of any person in this State unless it contains in substance the following provisions:
(1)CA Insurance Code § 10244(1) A provision that the insured, after three months’ premiums have been paid, is entitled to a period of grace not less than 30 days within which to make payment of any subsequent premium, subject to the option of the insurer to make an interest charge, not in excess of 6 percent per annum, for the number of days of grace elapsing before the payment of the premium; during said period of grace the policy shall continue in full force. But in case the policy becomes a claim during the said period, the amount of such unpaid premiums, with interest thereon, may be deducted from the amount payable under the policy in settlement thereof.
(2)CA Insurance Code § 10244(2) A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue or from the date of any reinstatement thereof except for suicide, nonpayment of premiums or the violation of the conditions of the policy relating to military or naval service in time of war.
(3)CA Insurance Code § 10244(3) A provision that the policy, the application therefor and any rider attached to the policy, shall constitute the entire contract between the parties; a copy of such application shall be endorsed upon or attached to the policy when issued. An application for reinstatement, if any, shall be a part of said contract even though not attached thereto. Such policy shall not incorporate therein, by reference or otherwise, the constitution, by-laws, or rules or regulations of any organization whatsoever. No insurer or society, including any society operating under Chapter 10 of Part 2 of Division 2 of this code, operating under any law which requires such incorporation shall issue or deliver funeral insurance contracts in this State.
(4)CA Insurance Code § 10244(4) A provision that all statements made by the insured in his application for the policy or reinstatement thereof, shall, in the absence of fraud, be deemed representations and not warranties.
(5)CA Insurance Code § 10244(5) A provision that if the age of the insured has been misstated in the policy or application thereof, the amount payable under the policy shall be such as the premium provided for therein would have purchased at the correct age.
(6)CA Insurance Code § 10244(6) A provision that before the insurer may pay the proceeds of such policy or any portion thereof to any undertaker or funeral director designated in the policy for funeral services or miscellaneous expenses in connection therewith, the insurer shall require proof satisfactory to it that the services and expenses have been rendered and if proof of rendition of services and expenses is not furnished within 30 days after demand is made upon the insurer for such payment and in any event within one year from the date of the insured’s death, the insurer shall pay the proceeds of such insurance to the beneficiary designated in the policy, and if no beneficiary is so designated, to the estate of the insured or to any person, other than to such undertaker or funeral director, appearing to the insurer to be equitably entitled to all or any portion of the proceeds by reason of having incurred expense or furnished funeral services for the insured, to the extent of the expense incurred or services furnished.
(7)CA Insurance Code § 10244(7) A provision granting the insured the right at any time during his lifetime to change the funeral director designated in the policy, if one be designated.
(8)CA Insurance Code § 10244(8) If an insurer issuing any such funeral insurance contract is subject to a provision in the laws under which it operates or in its constitution or charter, to the effect that any person purchasing such contract would be subject to additional assessments, premiums or calls other than the premium stated in the contract, then that fact shall be prominently displayed on the application for, and in such contract when issued.
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Section § 10246
This section states that all funeral insurance contracts must follow the rules and regulations outlined in Sections 10150 to 10167 and 10478 to 10489.6.
All funeral insurance contracts shall be subject in all respects to the provisions of Sections 10150 to 10167 inclusive, and of Sections 10478 to 10489.6 inclusive of this code.
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Section § 10247
This law allows people in California to buy a special type of life insurance known as limited death benefit insurance to help cover funeral costs. These insurance policies require that the buyer pay premiums over time. Importantly, these policies must comply with certain disclosure rules outlined in this law chapter to ensure buyers understand the terms.
Limited death benefit insurance contracts may be issued and delivered in this state upon the life of any person in this state who makes premium payments over a period of time to purchase a funeral insurance policy. Those policies shall be subject to the disclosure requirements of this chapter.
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Section § 10248
This law states that funeral insurance policies in California can't include terms that reduce the payout amount from what is stated on the policy, except in certain situations. These exceptions include mistakes about the insured person's age, policies related to suicide, military service, war clauses, or if the insured person is a minor. Additionally, if a policy includes limited death benefits, such benefits should not last for more than two years.
(a)CA Insurance Code § 10248(a) Except as permitted in Section 10247, no funeral insurance contract issued or delivered in this state upon the life of any person in this state shall contain any provision scaling down or reducing the benefits payable below the face amount of the policy. The provisions of this section, however, shall not apply to a reduction of the benefit payable because of a misstatement of the age in the policy or application therefor, nor to the suicide, military or naval service or war provisions of the policy, if any, nor to contestability of the policy, nor to a policy issued on the life of a juvenile.
(b)CA Insurance Code § 10248(b) If a limited death benefit insurance contract is issued under Section 10247, the limited death benefit period shall not exceed two years.
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Section § 10250
In California, funeral insurance contracts can only be offered by insurers that are officially recognized and operate on a legal reserve basis. This means the insurer must have a financial cushion set aside to ensure they can pay out on their policies.
No funeral insurance contract shall be issued or delivered in this State except by an admitted insurer issuing policies on a legal reserve basis.
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Section § 10252
This California law states that anyone who wants to sell or offer funeral insurance must have a life agent license. This is a specific requirement under Chapter 5, starting with Section 1621.
No person shall sell or offer for sale any such funeral insurance contract in this state unless he or she is licensed as a life agent pursuant to the provisions of Chapter 5 (commencing with Section 1621).
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