1. (a) Contract requirements. The department must approve a non-model contract before you can use it. Your proposed non-model contract must:

   1. (1) contain a disclosure informing the purchaser of the funeral goods and services that will be provided or excluded under the contract, as described by subsection (b) of this section;
   2. (2) define terms used in the contract as described by subsection (c) of this section;
   3. (3) state and explain the purchaser's obligations, your obligations, and the obligations of the funeral home if you are not performing all funeral services under the contract, and the impact of terms in the insurance policy on the contract if the contract is insurance-funded, as described by subsection (d) of this section;
   4. (4) disclose and explain the purchaser's cancellation rights under the contract and, if the contract is insurance-funded, the effect of insurance policy cancellation or assignment on the contract, as described by subsection (e) of this section;
   5. (5) state events of default under the contract for all parties and explain the consequences of default, as described by subsection (f) of this section;
   6. (6) state and explain the circumstances under which the responsible person may modify or change the contract at the death of the contract beneficiary, as described by subsection (g) of this section;
   7. (7) disclose and explain all payment terms under the contract and related provisions as described by subsection (h) of this section;
   8. (8) contain a section for required signatures and related notices as described by subsection (i) of this section;
   9. (9) contain a standard disclosure explaining how a purchaser can make inquiries or file complaints with specified regulatory agencies, as described by subsection (j) of this section;
   10. (10) comply with subsections (k) and (l) of this section;
   11. (11) comply with §25.4 of this title (relating to What Are the Plain Language Requirements for a Non-Model Contract or Waiver); and
   12. (12) be approved by the department as provided by §25.5 of this title (relating to How Do I Obtain Approval of a Non-Model Contract or Waiver).

2. (b) Statement of funeral goods and services selected. The first section of a proposed prepaid funeral benefits contract must inform the purchaser of the funeral goods and services that you will provide or exclude under the contract, as required by Finance Code, §154.151(e). This section must appear entirely on page one of the contract exactly as set out in the model contract and in the figure below, including substantially the same formatting and spacing, except:
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   1. (1) you may move specific goods and services between general description categories;
   2. (2) you may move specific goods and services between the category of goods and services to be provided and the category of goods and services not included in the contract;
   3. (3) you may change the description of specific goods or services if the alteration does not change the intent of the description in the standard disclosure;
   4. (4) you may add other, specific funeral goods and services to the list of included funeral goods and services;
   5. (5) you may delete the category designated "cash advance items" under included funeral goods and services if you do not sell cash advance items as prepaid funeral benefits and you list all cash advance items under funeral goods and services not normally included, provided that individual cash advance items may not be added to another category of included goods and services;
   6. (6) you may delete check boxes and related text for sealing features in casket and outer burial container descriptions, for example, "seal", "non-seal", "protective", and "non-protective", if these features are not included in the funeral home's price list; and
   7. (7) if the goods and services you sell are specifically limited and constitute significantly less than those goods and services normally required for a funeral, you may substitute a simplified disclosure that the contract is for your specific goods and services only and that you do not offer any other funeral goods and services. For example, you may substitute this limited disclosure if you sell only services relating to opening and closing of the grave or unique memorials that utilize a token portion of cremains, or if you only sell limited funeral goods such as outer burial containers or caskets without furnishing funeral services.
3. (c) Definitions. Your proposed prepaid funeral benefits contract must list, define, and use the terms "contract beneficiary", "responsible person", "funeral home", "purchaser", and "seller", or terms commonly understood by consumers to be equivalent, substantially as defined in a model contract. For example, you may substitute the term "provider" for "funeral home", or use a combined term such as "seller/provider" or "seller/funeral home" if you believe the alternate term is more descriptive of your services. If your proposed contract is insurance-funded, you must also list, define, and use the terms "insurance company", "insurance policy", and "premiums" in the contract, or terms commonly understood by consumers to be equivalent, substantially as defined in the department's insurance-funded model contract. You may list, define and use additional terms if they are consistent with the requirements of §25.4 of this title.

4. (d) General provisions. Your proposed prepaid funeral benefits contract must recognize and explain the purchaser's obligations, your obligations, and the obligations of the funeral home if you are not performing all funeral services under the contract, and the impact of terms in the insurance policy on the contract if the contract is insurance-funded, with respect to:

   1. (1) your obligation (and that of the funeral home) to furnish the funeral goods and services selected in the contract for a cost not to exceed the total contract price at the death of the contract beneficiary, if the purchaser has fully complied with the contract and with each insurance policy, if the contract is insurance-funded;
   2. (2) the purchaser's inability to change the selected funeral goods and services during the life of the contract unless the contract is voided and replaced with a new contract;
   3. (3) the extent to and conditions under which the purchaser may change the funeral home specified in the contract or, with respect to a trust-funded contract, the contract beneficiary;
   4. (4) whether the purchaser may incur tax liability for earnings under a trust-funded contract or for growth under an insurance policy if the contract is insurance-funded;
   5. (5) the extent to which you offer any warranties or guarantees or assert any specific disclaimers of warranty;
   6. (6) the prohibition on partial cancellation of or loans against the contract;
   7. (7) if the transaction may result in available funds in excess of the contract price at the time the funeral is performed, identification of who is entitled to such excess funds;
   8. (8) each party's general contractual duties under the contract and the extent to which the contract is binding on a person who assumes the rights or obligations of a party to the contract;
   9. (9) the manner in which a party must notify other parties of a change of address; and
   10. (10) if the contract is insurance-funded, the requirement that terms of the insurance policy must be consulted for information concerning the obligations of the insurance company and those of the policy owner.

5. (e) Cancellation or assignment. Your proposed prepaid funeral benefits contract must recognize and explain:

   1. (1) with respect to a trust-funded contract:

      1. (A) the requirement for, and 15-day delay that applies to, a separate, written waiver of cancellation rights if the purchaser chooses to irrevocably waive the right to cancel the contract;
      2. (B) the manner in and conditions under which the purchaser may cancel the contract, including the procedural requirements applicable to a cancellation, including the purchaser's obligation to request cancellation in writing on department-approved forms and your obligation to pay a refund not later than the 30th day after receipt of the purchaser's written cancellation notice;
      3. (C) the amount of the refund or other payment that you will owe the purchaser if the contract is canceled and the conditions or circumstances that may alter the refund amount; and
      4. (D) the refund or other benefits you will owe the purchaser if the contract is canceled at your request; or

   2. (2) subject to modifications or clarifications required by §25.2(a)(2) of this title (Relating to Am I Required to Use the Model Contract and Model Waiver), with respect to an insurance-funded contract:

      1. (A) the purchaser's right to assign the purchaser's interest in an insurance policy by signing a separate document;
      2. (B) the qualification that canceling the contract does not automatically cancel the insurance policy but canceling the insurance policy does cancel the contract;
      3. (C) the requirement for, and 15-day delay that applies to, a separate, written waiver of cancellation rights if the purchaser chooses to irrevocably waive the right to cancel the contract, unless the contract is funded by an insurance policy for which an irrevocable assignment of ownership rights has been made;
      4. (D) the procedural requirements applicable to a cancellation of the contract, including the purchaser's obligation to request cancellation in writing on department-approved forms and the statutory obligation, if applicable, to pay a refund not later than the 30th day after receipt of the purchaser's written cancellation notice;
      5. (E) the refund the purchaser may expect if insurance coverage is denied, and the conditions or circumstances that may alter the refund amount;
      6. (F) the purchaser's obligation to read the insurance policy to determine the conditions imposed upon cancellation and the potential amount of refund that would be due if the policy is canceled during or after the "free look" period;
      7. (G) the consequences the purchaser may expect, whether refund of premium, receipt of cash surrender value, or other benefits from you or another person, if the contract is canceled at your request; and
      8. (H) the effect that loans against or withdrawal of proceeds accrued under an insurance policy will have on the contract and on price guaranties in the contract.

6. (f) Default. Your proposed prepaid funeral benefits contract must explain events and consequences of default under the contract and under each insurance policy if the contract is insurance-funded, including:

   1. (1) the potential effect on the contract if the purchaser fails to make a payment or makes a late payment under the contract or under an insurance policy if the contract is insurance-funded;

   2. (2) the effect on the contract and on payments due if the contract beneficiary dies:

      1. (A) before the purchaser's payment obligations have been fulfilled under a trust-funded contract; or

      2. (B) if the contract is insurance-funded:

         1. (i) during a period when an insurance policy pays reduced benefits, if applicable; or
         2. (ii) before the premium obligations have been fulfilled on an insurance policy, if applicable; and
   3. (3) the conditions under which you may owe a full or partial refund to the purchaser of funds received under a contract, or a full or partial abandonment of your rights to anticipated proceeds of an insurance policy if the contract is insurance-funded and proceeds are not yet received, as a consequence of your inability (or the funeral home's inability, if you are relying on another to perform portions of the contract) to furnish the selected funeral goods and services;
   4. (4) only with respect to a trust-funded contract, whether or not the purchaser may make a claim to the prepaid funeral guaranty fund governed by §25.17 of this title (relating to Guaranty Fund), if you are unable to honor the contract terms.
7. (g) Changes to a contract at the death of contract beneficiary. Your proposed prepaid funeral benefits contract must disclose the circumstances under which the contract may be modified by the responsible person at the death of the contract beneficiary, as required by Finance Code, §154.151(e). The disclosure must appear exactly as set out in the model contract and in the figure below, without modification, except that the phrase "fully funded" must be substituted for the phrase "fully paid" wherever it appears in this disclosure when used in an insurance-funded contract. In addition, you may use a larger type size if feasible.
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8. (h) Payment terms. Your proposed prepaid funeral benefits contract must clearly state and explain payment terms and related provisions, including:

   1. (1) how and when you will deposit a payment received under a trust-funded contract, or forward any premiums received to the insurance company for application to an insurance policy if the contract is insurance-funded;
   2. (2) with respect to a trust-funded contract, whether and the extent to which you will retain a portion of the purchaser's payments for reimbursement of your operating and selling expenses;
   3. (3) with respect to a trust-funded contract, the finance charges you will impose, if applicable, provided that the description must also comply with Finance Code, Chapter 345, and other state and federal law governing such charges;

   4. (4) subject to modifications or clarifications required by §25.2(a)(2) of this title, with respect to an insurance-funded contract:

      1. (A) the effect on the contract if insurance coverage is denied and the manner in which written notice of the reason for denial will be sent to the policy owner;
      2. (B) if payment terms under the insurance policy are not disclosed in the contract, a space for the purchaser to initial or sign to acknowledge that the purchaser has received written information regarding the terms governing premium payments in another document that the purchaser received at the time of sale, such as the application for insurance or the insurance policy;
      3. (C) if the information the purchaser receives regarding payment terms under an insurance policy is based on an estimate of premiums, notice that actual premiums could be more or less than estimated after the insurance company completes its underwriting process;
      4. (D) notice that insurance premiums paid on the insurance policy or policies may be more or less than the total contract price; and
   5. (5) other contract provisions that materially relate to payment terms under a contract or under an insurance policy.

9. (i) Required signatures and notices. Your proposed prepaid funeral benefits contract must contain a section for required signatures and related notices that appears in its entirety on the last page of the contract. This section must include:

   1. (1) a list of all items that must be received or offered before the contract can be signed;
   2. (2) if required by state or federal law, cooling-off period language that includes spaces to note when and where the contract was signed;
   3. (3) notice that the purchaser will receive a copy of the contract;

   4. (4) if the contract is insurance-funded:

      1. (A) notice that the policy owner will receive a copy of the insurance policy from the insurance company; or
      2. (B) if the insurance company is not legally required to deliver a copy of the insurance policy to the policy owner, notice that the policy owner may request a copy of the insurance policy from the insurance company;

   5. (5) spaces for:

      1. (A) the purchaser's printed name, mailing address, telephone number, social security number (if required), and signature line;
      2. (B) if you are not directly providing the funeral goods and services, the printed name, mailing address, and telephone number of the funeral home, and spaces for the printed name and signature of the authorized officer or agent signing on behalf of the funeral home;
      3. (C) your printed name, mailing address, and telephone number, and spaces for the printed name and signature of the authorized officer or agent signing on your behalf; and
      4. (D) the printed name, mailing address, and date of birth of the sole individual designated as contract beneficiary; and
   6. (6) other provisions, party identifications, or certifications legally required for valid execution of the contract.

10. (j) Inquiries and complaints notice. Your proposed prepaid funeral benefits contract must disclose how a purchaser, potential purchaser or consumer can make consumer inquiries and complaints to the department as required by Finance Code, §11.307(a), and §25.41 of this title (relating to How Do I Provide Information to Consumers on How to File a Consumer Complaint), and to other specified state regulatory agencies with appropriate jurisdiction.

    1. (1) This disclosure must appear exactly as set out in the relevant model contract, including the state seal and the names and contact information for each regulatory agency, without modification, and will vary in context depending on whether the proposed contract is trust-funded or insurance-funded. The model disclosures for both trust-funded and insurance-funded contracts appear in:
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    2. (2) If the disclosure does not appear at the bottom of the last page of the contract following the signatures of the parties, it must be placed at the top or bottom of a preceding page and be separated from other contract text by at least 1/2 inches of white space. The disclosure may not be placed on a page by itself.

11. (k) Additional requirements. A proposed prepaid funeral benefits contract must also contain:

    1. (1) page numbers;
    2. (2) a document title that discloses the contract is for the purpose of prearranging a funeral, such as "Prepaid Funeral Benefits Contract";
    3. (3) a distinguishing form number or name;
    4. (4) your permit number; and
    5. (5) a space for the contract number.

12. (l) Your proposed non-model contract or waiver form may contain:

    1. (1) additional contract clauses that are fair to consumers in light of the purpose of Finance Code, Chapter 154; and

    2. (2) additional consumer disclosures that you determine:

       1. (A) will assist the purchaser in understanding the transaction; or
       2. (B) are required by other state or federal law for the type of transaction the contract represents.

Source Note:The provisions of this §25.3 adopted to be effective March 14, 2002, 27 TexReg 1706.