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History
- Referred to insurance
- Referred to insurance
Full text
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Sponsor's memo
BILL NUMBER:S5543
Title of bill
An act to amend the insurance law and the public health law, in relation to payment of commissions for funeral directing
Purpose
This legislation authorizes insurers to pay commissions to certain licensed insurance agents on the sale of certain life insurance policies.
Summary of provisions
Section 1 of the legislation amends section 3208 of the insurance law to allow insurers to pay commissions to certain licensed insurance agents on the sale of certain life insurance policies.
Section 2 of the legislation amends section 3450 of the public health law to prohibit suspension or revocation of a funeral director's license for accepting a commission, as a licensed insurance agent, for the sale of certain life insurance policies.
Section 3 of the legislation is the effective date.
Justification
In virtually all states except New York, consumers have two choices for preneed funeral funding. Those two choices are a preneed funeral trust and preneed life insurance. Preneed life insurance funding is effectively banned in New York because payment of insurance commissions to funeral directors who are actually licensed insurance agents is prohibited in New York. Consequently, consumers are denied the freedom to choose which funding option best suits their personal needs when prearranging a funeral.
There is no compelling reason to restrict the payment of commissions to funeral directors that are properly licensed to sell life insurance in NYS. In addition to providing consumers with the freedom to choose different funding options, this legislation offers other benefits to consumers in NYS. In situations where the consumer cannot pay the full cost of a funeral in advance, insurance products can provide immediate first-dollar coverage for the full amount of the funeral whereas trust funds must accumulate. In addition, Medicaid and Social Security Supplemental Income (SSI) programs both recognize and promote use of life insurance as an appropriate vehicle to spend down assets when applying for Medicaid or SSI benefits (the current system in NYS effectively denies New York consumers this option).
In addition to the consumer benefits, this legislation also benefits the State since under the current system insurance premium tax dollars and insurance licensing fees paid to the State are lost.
Legislative history
New Bill.
Fiscal implications
None.
Effective date
This act shall take effect immediately, with provisions.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.