On November 1, 2002, this office issued two policy statements interpreting the Cemetery and Funeral Services Act of 2000 ("the Act"). These policy statements address certain sales practices engaged in by funeral homes. The conclusions expressed in those policy statements can be summarized as follows:

1. Life Insurance Policies. The use of a life insurance policy as a funding vehicle for sales of services and merchandise by a funeral home does not constitute a preneed sale under the Act if the customer retains both the sole ownership of the policy and the right to change the beneficiary and to revoke any assignment made in connection with the policy benefits.

2. Certificates of Deposit. The use of a certificate of deposit as a funding vehicle for sales of services and merchandise by a funeral home does not constitute a preneed sale if the customer retains both the sole ownership of the certificate and the right to revoke any payable-upon-death designation.

A funeral home that fails to register as a preneed dealer in supposed reliance upon one or both of the policy statements may be liable for civil penalties and other sanctions if the circumstances in fact require registration. Therefore, if you intend to utilize life insurance policies or certificates of deposit as funding vehicles, you are strongly encouraged to review the applicable policy statement in detail with your own legal counsel.

Policy Statement - Use of Certificates of Deposit for Funding the Purchase of Preneed Funeral Services and Merchandise (available in Adobe Acrobat format)