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Maryland State Exam > Preneed Contract > Flashcards

Preneed Contract Flashcards

0
Q

Who and who ONLY may make prearrangement and execute preneed contracts with buyers

A

Licensed mortician, licensed funeral directors or holder of a surviving spouse license

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1
Q

Definition: means that the seller has died or become disabled, or that the funeral service business has discontinued

A

Unable to perform

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2
Q

The seller and buyer of a preneed contract shall execute the contract in duplicate, with a copy of the original contract going to the ______ at the time the contract is signed

A

Buyer

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3
Q

The seller shall state in the preneed contract:

A

The time required for fulfilling the terms an conditions of the contract

The cancellation term

The conditions of refunds

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4
Q

On __________ of every year, the seller shall file with the Board a report on forms provided by the Board a certification by a certified public accountant of the sellers compliance

A

June 15

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5
Q

A seller who funds preneed contracts using a life insurance policy or an annuity shall have an ________ license

A

Insurance

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6
Q

Funds _________ be transferred from money-trust to an insurance-funded vehicle without the approval and signature on the insurance application of the buyer or legal representative of the buyer

A

May NOT

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7
Q

Within ____ days of receiving payment under a preneed contract, the seller shall deposit into an interest bearing escrow or trust account that is insured by the FDIC.

A

10 days

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8
Q

What is FDIC?

A

Federal Deposit Insurance Corporation

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9
Q

The amount deposited is either 100% or at least ____% of the selling price of the casket or casket vault under the preneed contract

A

80%

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10
Q

Money remaining in the interest bearing escrow or trust account after the performance of the contract belongs to the _____

A

Seller

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11
Q

Taxes due on interest is under the responsibility of the _____

A

Buyer

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12
Q

If transferring escrow accounts from one institution to another FDIC insured banking institution, the funeral home shall provide the new account information to the buyer along with a copy of the deposit slip within ______ days after transferring preneed funds

A

30

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13
Q

At the time a preneed contract is terminated, the seller shall refund to the buyer the payments and interest held for the buyer, if any one of the following conditions occur:

A
  1. The buyer or legal representatives of the buyer demands in writing a refund of the payments made.
  2. The business of the seller is discontinued
  3. The seller is unable to perform under the terms and conditions of the preneed contract for reasons other than an increase in the cost of goods and services
  4. The buyer fails to pay the entire contract price before the death of the beneficiary
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14
Q

If the death of the buyer or beneficiary occurs before the terms an conditions of the preneed contract are met, the buyer or legal representative of the beneficiary shall be given the option of:

A

Withdrawing all funds paid and interest

Or

Renegotiating a contract with mutually agreed upon financial adjustments

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15
Q

In a case where there i a sale or change in the ownership of a Funeral Corporation or Establishment, how would preneed contracts be handled?

A

The board and the buyer must be notified

And the buyer is given the right to withdraw

16
Q

A buyer may establish an irrevocable trust with respect to all or any portion of the payment made under the contract in an interest-bearing, federally insured escrow account or trust account held by the seller, but only I the purpose of entitling the buyer to be eligible for what?

A

Social Security benefits or for benefits under any other plan that restricts eligibility to those with limited assets

17
Q

If the buyer who sets up an irrevocable trust terminates the preneed contract with the seller, the buyer and seller shall take the following actions:

A
  1. The seller shall maintain the funds in trust for the beneficiary until a substitute seller is selected
  2. The buyer shall enter into a new preneed contract with the substitute seller
  3. The seller shall transfer the trust funds to the substitute seller for placement in a separate interest bearing escrow account or trust account
18
Q

The seller shall provide in the document establishing the following notice, conspicuously displayed in ___________ type:

“This document creates an irrevocable trust. Under the terms of this document, a buyer may not receive a refund of any payments made for the preneed burial or cremation contract”

A

10 point boldface

Maryland State Exam (17 decks)

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