BILL ANALYSIS �
AB 2279
Page 1
Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 2279 (Hagman) - As Amended: March 28, 2014
SUBJECT : Life insurance: funeral policies
SUMMARY : Increases from $15,000 to $20,000 the coverage amount
that can be sold by limited-license life insurance agents for
benefits designed to be used to cover funeral expenses.
EXISTING LAW :
1)Requires a person to obtain a license from the Insurance
Commissioner (commissioner) as a life agent, and be formally
appointed as an agent of a life insurance company, in order to
sell life insurance.
2)Requires pre-licensing education before the person can take
the examination to obtain a life agent license.
3)Requires life agents to take continuing education as a
condition of maintaining their life agent license.
4)Establishes exceptions allowing limited pre-licensing and
continuing education, and a separate license examination, for
a limited license life agent who sells only policies designed
to cover funeral expenses, provided that the face value of
these policies is no more than $15,000.
FISCAL EFFECT : Undetermined
COMMENTS :
1)Purpose . According to proponents, the maximum funeral policy
coverage limitation has not been increased in some time, and
the modest increase proposed by the bill is both justified and
necessary to serve a population that has limited life
insurance options. Proponents state that these policies
involve little underwriting, and are sold to older consumers
who have limited options to buy term life insurance due to
traditional underwriting. These policies are used to fund
arrangements where the consumer has selected a pre-determined
package of funeral and burial services, and the insurance
AB 2279
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mechanism is part of the financing of the pre-purchased plan.
2)Background . Funeral policies have long been used by consumers
to buy peace of mind by ensuring that their family is not
burdened by the costs of a funeral or burial after they pass
away. While non-insurance pre-funding arrangements are
available, they do not work for all consumers, and these
limited funeral policies have filled this gap in the market.
3)Department of Insurance . The Department of Insurance (DOI)
has not taken a position on the bill, but has consulted with
proponents concerning the increase of the coverage limitation.
According to the DOI, the increase from $15,000 to $20,000
represents a reasonable escalation over time that reflects
increases in the cost of purchasing funeral and burial
services.
REGISTERED SUPPORT / OPPOSITION :
Support
California Mortuary and Cemetery Association
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086