5.
(a)This section applies to the following
contracts entered into or established under this chapter after June 30,
1999:
(1)Contracts for prepaid services.
(2)Contracts for prepaid merchandise.
(3)Trusts or escrows established to hold consideration paid for
services or merchandise subject to a contract entered into under
this chapter.
(b)A contract between a purchaser and a seller must:
(1)specify that the consideration for the contract is:
(A)cash, payable either in a lump sum or in installments; or
(B)an insurance policy that is:
(i)newly issued in conjunction with and integral to the
contract;
(ii)issued previously in a transaction separate and distinct
from the contract; or
(iii)both.
If a contract is funded with an insurance policy, the ownership
of the policy must be irre
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5. (a) This section applies to the following
contracts entered into or established under this chapter after June 30,
1999:
(1) Contracts for prepaid services.
(2) Contracts for prepaid merchandise.
(3) Trusts or escrows established to hold consideration paid for
services or merchandise subject to a contract entered into under
this chapter.
(b) A contract between a purchaser and a seller must:
(1) specify that the consideration for the contract is:
(A) cash, payable either in a lump sum or in installments; or
(B) an insurance policy that is:
(i) newly issued in conjunction with and integral to the
contract;
(ii) issued previously in a transaction separate and distinct
from the contract; or
(iii) both.
If a contract is funded with an insurance policy, the ownership
of the policy must be irrevocably assigned to a trustee, and the
seller may not borrow against, pledge, withdraw, or impair the
cash value of the policy;
(2) specify that only the purchaser, acting by written notice to the
seller, may revoke the contract within thirty (30) days after the
date the contract is signed by the purchaser and the seller and that
the contract becomes irrevocable upon the expiration of the thirty
(30) day period;
(3) specify that, if the contract is revoked, the seller shall refund
and return to the purchaser, without interest, the cash or insurance
policy used to fund the contract;
(4) specify that not more than thirty (30) days after the contract is
signed by the purchaser and the seller, the whole of the cash or
insurance policy serving as consideration for the contract must be
deposited into a trust or escrow authorized by subsection (c) or
(d). However, a seller may elect to serve as trustee of a previously
existing life insurance contract;
(5) except as provided in subsection (f), unconditionally require
that the seller shall deliver all services or merchandise, or both,
specified in the contract and receive as consideration for the
delivery of services or merchandise, or both, only the cash or
insurance policy held in trust or escrow without regard to the
solvency of the insurer or the adequacy or loss in value of any
cash deposit or insurance policy used to fund a contract;
(6) except as provided in subsection (f), prohibit a seller from
imposing additional charges to recover any shortage or difference
between the retail prices for services or merchandise, or both, in
effect on the date of delivery of the services or merchandise, or
both, and the value of the trust or escrow applicable to the
contract on the date of delivery;
(7) require that a seller accepting the transfer of a contract
permitted under section 13 of this chapter shall honor the
requirements and obligations of the contract;
(8) permit the seller to assess a finance charge on a contract sold
on an installment basis and require that the seller disclose to the
purchaser the applicable requirements of federal and Indiana law;
(9) provide that the contract must comply with the following
requirements:
(A) The contract must be made in a form that is:
(i) written in clear and understandable language; and
(ii) printed in a size and style of type that is easy to read.
(B) The contract must describe the services, merchandise, or
cash advance items being purchased. If the merchandise or cash
advance items include a vault (as defined in IC 23-14-33-33)
that:
(i) will be used to encase the remains of a deceased
individual; and
(ii) is not airtight and watertight;
the contract must include a written statement indicating that the
vault is not airtight and watertight.
(C) The contract must identify the following by name, address,
and telephone number:
(i) The seller.
(ii) The purchaser.
(iii) The contract beneficiary if the beneficiary is an
individual other than the purchaser.
(D) The contract must contain the seller's certificate of authority
number and the date of the contract.
(E) The contract must provide that if an item of the particular
services or merchandise specified in the contract is unavailable
at the time of delivery, the seller shall deliver services or
merchandise similar in style, quality, and of equal value to the
unavailable item in the place of the item.
(F) The contract must disclose the precise manner in which the
contract is to be funded by:
(i) identifying the consideration for the contract;
(ii) identifying the name, number, if known, and issuer of any
insurance policy used to fund the contract; and
(iii) including the identity and location of the trustee or
escrow agent, acting as fiduciary, who is to hold the trust or
escrow.
(G) The contract must disclose that the seller reserves the right
to assess an extra charge for:
(i) transportation costs;
(ii) services or merchandise incurred in the transport of
human remains a distance greater than twenty-five (25) miles
from the seller's place of business; and
(iii) service charges necessarily incident to the transport of
human remains and in excess of those service charges
specified in the contract.
(H) The contract must disclose the following:
(i) The amount, if any, the seller has elected to receive under
subsection (c)(1) or subsection (d)(6).
(ii) That a commission or fee may be paid to the seller or the
seller's agent on a contract funded under subsection
(b)(1)(B)(i).
(10) specify that a purchaser has the unrestricted right to
designate one (1) or more successor sellers to whom the contract
may be transferred under section 13 of this chapter, but that such
a transfer is effective only with the consent of the newly
designated seller and upon the fulfillment of the other
requirements of section 13 of this chapter;
(11) specify that if cash advance items are funded in the contract,
the seller agrees to deliver the cash advance items under one (1)
of the following alternatives:
(A) Delivery is unconditionally guaranteed at the option of the
seller.
(B) Delivery is conditionally guaranteed for a seller and will be
equal in value to the total value of the trust or escrow account
maintained for the purchaser multiplied by the percentage of
the total original contract price represented by cash advance
items;
(12) specify that a release from trust or escrow shall occur only
upon the seller's delivery of services or merchandise, or both;
(13) permit, at the option of the seller, the incorporation of the
trust or escrow language contained in subsection (c) or (d)
directly into the contract;
(14) prohibit the seller from charging any service, transaction, or
other type of fee or charge unless the fee is:
(A) authorized under subsections (c)(1) and (d)(6) and section
27 of this chapter; or
(B) included within the definitions contained in section 8 or
11.5 of this chapter.
(c) A trust account authorized and established under this chapter
must do all of the following:
(1) Be irrevocable and require either of the following:
(A) The seller deposit the insurance policy used to fund the
contract into the trust account. However, for contracts funded
after June 30, 1995, with a previously issued insurance policy,
the seller may serve instead of a trustee if the seller is qualified
to do so under section 11(c) of this chapter.
(B) The seller deposit the cash used to fund the contract into the
trust account. However, as consideration for the sale of the
contract and any expense incurred by the seller in conjunction
with the sale of the contract, the contract must permit the seller
to notify, within a ten (10) day period following the date the
contract becomes irrevocable, the trustee of its election to
receive only up to ten percent (10%) of the seller's original
contract price for services or merchandise, or both.
(2) Designate the seller as the beneficiary of the trust.
(3) Designate a trustee qualified under this chapter and authorize
the trustee to assess the charges authorized under section 18 of
this chapter.
(4) Require that a separate account be maintained in the name of
each purchaser.
(5) Require that any interest, dividend, or accumulation in the
account be reinvested and added to the principal.
(6) Permit the assets of the several, separate accounts to be
commingled for investment purposes.
(7) Require that on receipt of the seller's proof of delivery of
services or merchandise the trustee shall remit to the seller the
full amount in trust applicable to the purchaser's contract and all
of the accumulated interest.
(8) Permit the seller to retain the remaining amount if the amount
in the trust account is greater than the seller's total current retail
price of all services and merchandise subject to the contract at the
time of delivery of all services or merchandise subject to the
contract. However, in the case of a contract funded under
subsection (b)(1)(B)(ii), the seller may not retain the remaining
amount but must pay the remaining amount to the entity or
individual designated by the insured as the beneficiary of the
death benefit proceeds not later than sixty (60) days after the
receipt and deposit of the proceeds by the seller. The seller may
not qualify as a beneficiary of the remaining amount or the
insurance death benefit. In the case of all other contracts funded
under this chapter, the seller may opt to return the remaining
amount to the individual designated by the purchaser to receive
the remainder or to the purchaser's estate.
(d) An escrow account authorized and established under this chapter
must do all of the following:
(1) Be irrevocable and require that the seller deposit all cash or
the insurance policy used to fund the contract into the escrow
account.
(2) Designate the seller as the recipient of the escrow funds.
(3) Designate an escrow agent, acting as fiduciary, qualified under
this chapter to act as escrow agent acting as fiduciary and
authorize the escrow agent acting as fiduciary to assess the
charges authorized under section 18 of this chapter.
(4) Require that the escrow account be maintained in the name of
the seller and serve as a depository for all cash or insurance
policies used to fund contracts sold by the seller.
(5) Permit the investment of and commingling of cash for
investment purposes.
(6) Permit the seller to receive an administrative or service fee at
the option of the seller. The seller may opt to receive the fee after
the day following the date the contract becomes irrevocable. The
amount of the fee may not exceed ten percent (10%) of the seller's
total contract price for services or merchandise or both.
(7) Require that on delivery of services or merchandise, the
escrow agent shall remit to the seller an amount equal to:
(A) the seller's original retail price as set forth in the contract
for the services or merchandise delivered; minus
(B) the amount, if any, received by the seller under subdivision
(6).
(8) Permit the seller to receive monthly payments of the interest
earned and the appreciation in the value of the escrow assets to
the extent that the total value of the escrow after a payment
authorized under this subdivision is not less than:
(A) the original contract value of all services or merchandise
under the contracts, or parts of the contracts that remain
undelivered; minus
(B) the amounts, if any, received by the seller under subdivision
(6).
(e) A trust account or an escrow account established under this
section must contain a concise written description of all the provisions
of this chapter that apply to the account.
(f) A seller's guarantee of delivery of all services or merchandise
subject to a contract sold by the seller or transferred to a seller is
unconditional except in the instance of one (1) of the following
circumstances:
(1) An installment contract funded with cash or an insurance
policy issued in conjunction with the contract is guaranteed to the
extent of the cash paid or death benefits available at the time of
death of the individual for whom services or merchandise are to
be provided.
(2) A contract funded with an insurance policy issued previously
and not in conjunction with the contract is guaranteed to the
extent of the death benefit proceeds available at the time of the
individual for whom services or merchandise are to be provided.
(3) A contract funded with an insurance policy issued in
conjunction with the contract, but having a limited or qualified
death benefit period, is guaranteed to the extent of the death
benefit proceeds available at the time of the death of the
individual for whom services or merchandise are to be provided.
(4) A transportation expense incurred by the seller while
transporting human remains a distance greater than twenty-five
(25) miles from the seller's place of business, plus any charge for
services or merchandise necessarily incident to the transport of
the human remains.
(5) The seller agrees to conditionally guarantee the delivery of
cash advance items under subsection (b)(11)(B).
In the instance of unguaranteed delivery, the seller may reduce the
value or number of the services or merchandise subject to the contract
or cash advance items delivered or deliver the services or merchandise
in full on the condition that the seller receives adequate consideration
to compensate the seller for the unguaranteed part of the contract.
(g) The entire value of an escrow or trust established under this
chapter may not be considered as a resource in determining a person's
eligibility for Medicaid under IC 12-15-2-17.
(h) This chapter does not prohibit a purchaser from immediately
making the trust or escrow required under this chapter irrevocable and
assigning ownership of an insurance policy used to fund a contract to
obtain favorable consideration for Medicaid, Supplemental Security
Income, or another public assistance program under federal or state
law.
(i) A seller may not accept or deposit into a trust or escrow account
cash, an insurance policy, or any other property as consideration for
services or merchandise to be provided in the future except in
conjunction with a contract authorized by this chapter.