Texas Senate Bill SB579

Texas 2011 - 82nd Regular

• Introduced: 2/9/11
• Out of Senate Committee: 3/23/11
• Voted on by Senate: 3/31/11
• Refer: 2/17/11
• Out of House Committee: 5/17/11
• Report Pass: 3/23/11
• Voted on by House: 5/19/11
• Engrossed: 3/31/11
• Governor Action: 6/17/11
• Refer: 4/28/11
• Report Pass: 5/17/11
• Enrolled: 5/20/11
• Passed: 6/17/11

Caption

Relating to the total benefit amount under a prepaid funeral contract.

Impact

The legislation affects any prepaid funeral contract formed on or after its effective date, which is set for September 1, 2011. Contracts that were established before this date remain governed by the previous laws, which allowed for higher guaranteed death benefit amounts. By placing this limit, the bill seeks to ensure that consumers are not overcharged for funeral plans and that they receive adequate value in the policies they purchase. This can lead to increased consumer confidence in funeral prearrangements, knowing there are regulatory safeguards in place.

Summary

Senate Bill 579 pertains to the financial limits placed on prepaid funeral contracts in Texas. Specifically, it amends Section 4054.157 of the Insurance Code to establish a cap on the initial guaranteed death benefit that can be written by funeral prearrangement life insurance agents. Under the new law, the death benefit cannot exceed the total cost of the prepaid funeral benefits that are purchased under the contract. This change aims to protect consumers from being sold insurance policies that vastly exceed the costs of the funeral services they intend to pay for in advance.

Contention

Discussion surrounding SB579 highlighted the need for regulatory oversight in the area of funeral prearrangement life insurance. While proponents of the bill argue that it serves to enhance consumer protection and prevent potential exploitation by agents selling excessive policies, there may still be concerns about how this regulation might affect the funeral industry’s business practices. Some stakeholders may view these limitations as restrictive or may be worried about the potential impact on insurance agents' commission structures, leading to calls for additional avenues to support both consumers and service providers effectively.