BILL NUMBER: S6562
SPONSOR: LANZA
 
TITLE OF BILL:
An act to amend the general business law, the insurance law and the
public health law, in relation to preneed insurance; and providing for
the repeal of such provisions upon expiration thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
To permit the sale of preneed insurance in New York State.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill would amend Subdivision 1 of section 453 of the
general business law to clarify that any and all money paid to a life
insurance company as premium for preneed life insurance as defined in
section 107 of the insurance law shall be considered as premium paid to
an insurer.
Section 2 of the bill would amend Subdivision (a) of section 107 of the
insurance law to add a new paragraph (55) to include a definition of
preened life insurance.
Section 3 of the bill would amend Subdivision (d) of section 3208 of the
insurance law to permit the assignment of a contract or, policy, to a
designated funeral home so long as the assignment is contingent upon the
provision of funeral goods and services by the assignee at the time of
death of the insured; to prohibit the seller or provider of the preneed
life insurance policy to be named as the owner or beneficiary of the
policy of preneed life insurance; and to prohibit the sale of a policy
of preneed life insurance with a face value greater than $20,000.
Section 4 of the bill would amend Section 3208 of the insurance law by
creating a new subdivision (e) to set forth the required consumer
disclosures to be provided at the time an application for preneed life
insurance is made.
Section 5 of the bill would amend Paragraph (I) of subdivision 1 of
section 3450 of the public health law to exclude from the prohibition on
the payment of consideration a commission authorized pursuant to article
twenty-one of the insurance law.
Section 6 is the effective date, which also provides that the amendments
set forth in this act shall expire, be deemed released and shall cease
to be of any force or effect after June 1, 2023.
 
JUSTIFICATION:
New York currently prohibits funeral directors who are licensed insur-
ance agents from receiving a commission for the sale of pre-need funeral
insurance. This is the only insurance product on the market for which a
commission cannot be paid. Forty-eight states across the country allow
commission-based sales of insurance by funeral directors who are also
licensed insurance agents. Life insurance companies domiciled in New
York are not able to offer their product within the state's borders; all
while offering similar products across the country.
The New York State Department of Financial Services (DFS) has a compre-
hensive system for approval and oversight of any insurance product sold
to consumers. Independent insurance agents are licensed by DFS only
after completing significant hours of course work and passing the state
licensing examination. Additionally, on-going continuing education is
required for agents to maintain their license.
This legislation promotes consumer choice in the marketplace, by allow-
ing consumers an alternative funding vehicle to fund their final
expenses. Similarly, this legislation allows funeral directors the
option to offer a variety of funding vehicles to their customers.
Currently, the only funding mechanism available to consumers is to put
their money into a trust. Experience across the country proves that
insurance is a viable funding alternative for which there are many
advantages. Unlike trust-funded accounts, which only provide as much
money as is in the account for funeral expenses, pre-need funeral insur-
ance provides the entire face value of the policy for funeral expenses
the moment the policy is issued. This legislation sets forth consumer
protection measures related to the sale of preneed funeral insurance,
including specific disclosures required at the time of policy applica-
tion, a prohibition on the seller of the preneed life insurance policy
being named as the owner or beneficiary of the policy of preneed life
insurance, and a cap on the face value of the policy of preneed life
insurance at $20,000.
 
PRIOR LEGISLATIVE HISTORY:-Referred to
2024: S.4605 - Referred to Consumer Protection
2023: S.4605 - Referred to Consumer Protection
2022: S.5610 - Referred to Consumer Protection/ A.6995 Consumer Affairs
& Protection
2021: S.5610 - Referred to Consumer Protection/ A.6995 - Referred to
Consumer Affairs & Protection
2020: S.820 - Referred to Consumer Protection! A.7301 Referred to
Consumer Affairs & Protection
2019: S.820 - Referred to Consumer Protection! A.7301 Referred to
Consumer Affairs & Protection
2018: S.6143 - Referred to Consumer Protection / A.7838-A - Referred to
Consumer Affairs & Protection
2017: S.6143 - Referred to Consumer Protection / A.7838 - Referred to
Consumer Affairs & Protection
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
 
EFFECTIVE DATE:
Immediately.

Statutes affected:
S6562: 107 insurance law, 107(a) insurance law, 3208 insurance law, 3208(d) insurance law, 3450 public health law, 3450(1) public health law