HBA-NLM H.B. 1635 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1635 By: Hupp Financial Institutions 3/14/1999 Introduced BACKGROUND AND PURPOSE In an effort to plan for the future, many Texans are buying prepaid funeral contracts to lock into place prices for funeral services and to provide security against the possible financial burdens of an unanticipated death. However, Texans are becoming more transient, which poses a problem for the purchaser of a prepaid funeral contract. Since the contracts are usually nontransferable, the purchaser's only option is to cancel the contract, which entitles them to a 90 percent refund of the original amount, excluding interest. Most purchasers are not aware of this provision in a prepaid funeral contract. The purpose of this bill is to place within the contract for prepaid funeral services a clause that would ensure that the purchasers are aware of provisions which may result in some financial repercussions. H.B. 1635 provides that a sales contract for prepaid funeral benefits must contain, in boldfaced type, the provision that unless the funeral provider named in a contract agrees otherwise, the purchaser's use of a funeral provider not named in the contract is a cancellation of the contract by the purchaser. This bill also provides that if a contract is canceled by the purchaser, the purchaser is not entitled to receive any earnings on the amount deposited in trust pursuant to the contract. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 154.151(b), Finance Code, to provide that a sales contract for prepaid funeral benefits must contain in immediate proximity to the space reserved in the contract for the signature of the purchaser a statement in boldfaced type of a minimum size of 10 points in substantially the following form: "Unless the funeral provider named in this contract agrees otherwise, the purchaser's use of a funeral provider not named in this contract is a cancellation of this contract by the purchaser. If this contract is canceled by the purchaser, the purchaser is not entitled to receive any earnings on the amount deposited in trust pursuant to this contract." Makes nonsubstantive changes. SECTION 2. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 3. Emergency clause.