(a) Burial associations petitioning the State Board of Embalmers, Funeral Directors, Cemeteries, and Burial Services for approval for assumption by an insurance company shall submit the following documents to the board at least ninety (90) days prior to the proposed effective date of the assumption:

1. (1) A notarized copy of the minutes of the meeting at which the assumption was approved;
2. (2) A copy of the public notice announcing the meeting to discuss the assumption; and
3. (3) A notarized copy of the letter to be sent to all association policy holders stating the date, time, and place of the public meeting, as well as the particulars of the assumption.

(b) In order that an insurance company may assume a burial association, the following conditions must be met:

1. (1) The insurer must be a legal reserve or stipulated premium insurance company, actively engaged in business in the State of Arkansas, for the last two (2) years;

2. (2)

   1. (A) The assuming insurance company must conduct an independent actuarial study to determine the amount of money that is needed to reserve the policies of the burial association being assumed.
   2. (B) This study is subject to board approval;
3. (3) The face amount of the policy issued by the insurance company, in lieu of the membership certificate, shall be in the same amount and at the same premium rate as the membership certificate;
4. (4) The assuming insurance company must state in its assumption agreement that all claims on behalf of a policyholder, will be paid in cash and in an amount not less than one hundred percent (100%) of the face amount of the benefit that the member was entitled to under the certificate of membership in the burial association;
5. (5) The owner of the policy shall have the exclusive right to name the beneficiary of his or her choice, and the owner may change the beneficiary at his or her option in writing;
6. (6) The insurance provider shall not require the policyholder to select either services or merchandise from any particular provider of such services or merchandise in order that the one hundred percent (100%) of the face amount of the policy, issued in lieu of membership certificates, be payable;

7. (7) The funds in the mortuary reserve fund will be disbursed as follows:

   1. (A) All just claims, debts, and obligations of the burial association will be paid;
   2. (B) A pro rata distribution will be made to the policyholders opting out of the assumption;
   3. (C) The reserve amount, subdivision (b)(2) of this section, as determined by the independent actuarial study, will be paid to the assuming insurance company; and
   4. (D) After all required disbursements are made, any funds remaining in the mortuary reserve shall be returned to the policyholders; and
8. (8) All holders of membership certificates in a burial association shall be assumed by the insurance company, in the same amount and at the same premium rate as under the membership certificate, without being required to submit proof of insurability.

(c)

1. (1) Insurance companies wishing to assume a burial association shall submit the following documents to the board, at least ninety (90) days prior to the proposed effective date of the assumption:

   1. (A) A petition for assumption;
   2. (B) The plan of liquidation;
   3. (C) The assumption agreement; and
   4. (D) The assumption notice.

2. (2)

   1. (A) Upon receipt of the documents from both the burial association and the assuming insurance company, the executive secretary shall review the documents submitted for compliance with this section.
   2. (B) Additionally, a copy of the documents shall be submitted to the State Insurance Department for review regarding the petitioners’ compliance with the department rules.
   3. (C) The secretary shall provide the board with a copy of the documents at least twenty (20) business days prior to the next regularly scheduled board meeting for consideration at that meeting.

(d) Plan of liquidation. The plan of liquidation shall include:

1. (1) The effective date of the planned liquidation;
2. (2) The transfer of the rights held under the membership certificate to the insurance company and that the burial association shall have no liabilities as of the effective date of the liquidation;
3. (3) A plan to transfer the assets of the association as provided for in subdivision (b)(7) of this section;
4. (4) The date of the closing of the burial association;
5. (5) A statement that the insurance company accepts cession of the burial association membership certificates and that it assumes all liabilities of the membership certificates, together with all debts and obligations of the association being assumed, and further that the liabilities, debts, and obligations of the association shall not be greater than the association had prior to the assumption, except that there shall be no less than one hundred percent (100%) of the face amount of the policy payable in cash; and
6. (6) That policies shall be issued by the insurance company stating the name of the insurance company, the names of the insured, the amount of coverage for each individual and the premium rates for each individual covered by the policy.

(e) Assumption agreement. The assumption agreement shall include that:

1. (1) The benefits formerly contemplated under the membership certificates are now payable through the insurance company and that such benefits are payable in cash only;
2. (2) The insurance company shall have the right to assume those assets of the burial association as provided for in subdivision (b)(7) of this section, in exchange for the liabilities of the association;

3. (3)

   1. (A) If the holder of a membership certificate in a burial association does not desire to be assumed by the insurance company and “wishes to opt out”, he or she may, within sixty (60) days, return the assumption notice and request this “opt out” pro rata share of the association’s reserves as computed and certified by the assuming insurance company.
   2. (B) Continued payment of premiums constitutes acceptance of the assumption;
4. (4) The coverage provided through the insurance company shall be in the same amount and at the same premium rate as that held under the certificate of membership in the association; and
5. (5) Those responsible for making funeral arrangements for the deceased policyholder shall have the freedom to choose a funeral home or other funeral service and merchandise provider of their choice, and further that such choice shall not diminish the face amount of the policy of such.

(f) Assumption notice.

1. (1) The assumption notice shall be mailed or provided to each member of the association being assumed.
2. (2) The notice of assumption shall be provided to each member in good standing, on the effective date of the assumption, without proof of insurability.

3. (3) The assumption notice shall provide the following:

   1. (A) Effective date of the assumption;
   2. (B) Information regarding the assumption including:

(i) Uninterrupted insurance coverage without proof of insurability;

1. (ii) Continued, same premium rate;

   1. (iii) Proceeds payable in one hundred percent (100%) of the face amount, in cash; and

      1. (iv) Exclusive right of the policyholder to name the beneficiary of his or her choice and right to change the beneficiary at his or her option, in writing; and
   2. (C) Information regarding the opting out provisions, including a policyholder’s right to a pro rata share of the mortuary fund reserves as determined by subdivision (b)(7) of this section.