Loading...

    Explore
    • Policy Monitoring
    • Live Policy Feed
    • Billing Codes
    • NPI Medicare & Medicaid
    • Healthcare Providers
    • Health Insurance Payers
    • States
    • Service Lines
    • Taxonomy Codes
    Lookup tools
    • Billing Code Lookup
    • CPT Modifier Lookup
    • Provider Taxonomy Code Lookup
    • Healthcare Provider & Facility Lookup
    • Health Insurance Payer Lookup
    • Payer Contact Directory

    Policy & Benchmark Tools

    • Prior Authorization Lookup
    • Coverage Criteria Lookup
    • Timely Filing Lookup
    • Billing Code Reimbursement Rates
    • Payer Comparison Dashboard
    • Facility Comparison Dashboard
    • All tools

    Company

    • About OpenPayer
    • Data Sources
    • Trek Health
    OpenPayerby Trek Health
    LinkedInYouTube

    © 2026 Trek Health. All rights reserved.

    OpenPayer is built and maintained by Trek Health.

    v1.0.28
    OpenPayerPolicy UpdatesAdministrative/Operational PolicyAlabama DOI preneed life insurance Policy Update |…
    Ask Trek AI about this page
    CurrentAlabama Department of InsurancePolicy N/A

    Compliance with Alabama insurance laws in connection with preneed sales

    Customize your policy alerts

    Sign up for all Alabama Department of Insurance policy alerts

    Know when Alabama Department of Insurance releases new policies or updates existing guidance.

    Monitor payer policy activity

    Receive email alerts as soon as relevant payer policies are published or updated.

    This bulletin governs requirements for preneed providers, their sales agents, and insurers when life insurance is used to fund preneed funeral or cemetery contracts in Alabama. It affects preneed providers holding certificates of authority, registered preneed sales agents/employees, and insurers authorized to write life insurance in Alabama.

    Policy Summary
    PayerAlabama Department of Insurance
    PolicyCompliance with Alabama insurance laws in connection with preneed sales
    Policy CodePolicy N/A
    Change TypeNo material changes
    Effective DateAug 1, 2008
    Next Review DateN/A
    Key ActionEnsure any agent who solicits, negotiates, or sells individual life insurance incident to a preneed contract is properly licensed and appointed by the insurer before commissions are paid.
    SourceLink
    POLICY UPDATE CHANGES

    No material clinical or coverage changes in this revision.

    9numbered compliance points listed
    retail amountminimum coverage requirement stated
    licensing requiredproducer licensing requirement
    group life

    OpenPayer is powered by Trek Health's payer performance platform. Trek continuously ingests, validates, and normalizes Transparency in Coverage data alongside payer policies and other commercial payer data to create a structured payer intelligence foundation. OpenPayer uses this foundation to deliver personalized search results, dynamically generated policy pages, and tailored policy monitoring based on each user's payers, specialties, billing codes, and areas of interest. The same intelligence powers broader payer performance workflows, including reimbursement benchmarking, contract evaluation, payer negotiations, and financial decision-making.

    licensing exceptions

    Life Insurance Funding — Compliance Criteria

    Life insurance funding compliance criteria

    Requirements and conditions when life insurance is used to fund preneed contracts:

    Life insurance may be used as an alternative funding mechanism to trust deposits under the Alabama Preneed Funeral and Cemetery Act.
    Life insurance may only be offered through insurers authorized by the Commissioner to write life insurance in Alabama; policies and related forms must be submitted to and approved by the Department before use.
    Individuals who solicit, negotiate, or sell individual life insurance incident to a preneed contract must be properly licensed as insurance producers, appointed by the insurer, and comply with Title 27 chapters 7 and 8A and implementing regulations; business entities may hold entity producer licenses but must designate at least one individually licensed employee responsible for compliance and appropriate licensing is a pre-condition to payment and receipt of commissions.

    Exception

    • The life insurance product being offered is group life insurance.
    • The agent's or employee's insurance-related activity is strictly limited and incidental to the preneed sale.
    • The agent or employee is not paid a commission for such activity.
    Life insurance sold to fund a preneed contract must cover at least the retail amount of the preneed contract at the time of purchase.
    Payments for life insurance must be payable to the order of the insurance company; if payment is tendered to the preneed provider, the provider must furnish a receipt complying with Reg. 482-1-078-.05.
    A preneed provider may be designated beneficiary of the life insurance but should not ordinarily have ownership or control rights over the coverage; transfers of coverage or its financial equivalent to another provider upon cancellation or inability to perform should be addressed appropriately.
    A life insurance-funded preneed contract shall not state, represent, or tend to cause confusion that the contract is trust-funded or that the preneed provider will place any portion of the purchase price in a trust.

    Policy Coding / Not Applicable Codes

    Not applicablemixed
    No procedure or diagnosis codes in this administrative bulletin.

    Agent and Provider Requirements

    Prior Authorization

    Producer licensing and appointment required for individual life sales

    Agents or other employees who solicit, negotiate, or sell individual life insurance incident to a preneed contract must be properly licensed as insurance producers, must be properly appointed by the insurance company whose product is being offered, and must comply with Title 27, chapters 7 and 8A and implementing regulations. Appropriate licensing is a pre-condition to payment and receipt of commissions; business entities may hold an entity producer license but must designate at least one individually licensed employee responsible for compliance.

    • Must hold individual producer license (or entity must designate an individually licensed employee responsible for compliance).
    • Must be appointed by the insurance company whose product is offered.
    • Licensing is a pre-condition to payment and receipt of commissions.
    • Must comply with Ala. Code Tit. 27, chapters 7 and 8A and implementing regulations.
    Note

    Exception: group life and strictly incidental activity (no license required)

    Key Definitions

    Preneed provider — definition
    TermPreneed provider
    MeaningAn entity that offers preneed funeral or cemetery merchandise and services and enters into preneed contracts; such providers may be subject to licensing and trust or insurance funding rules under the Alabama Preneed Funeral and Cemetery Act.
    Entity producer licenseA preneed provider that is an artificial legal entity may hold a business entity producer license but must designate at least one individually licensed employee responsible for compliance.
    Role in insurance-funded contractsMay offer life insurance funding as an alternative to trust deposits only through insurers authorized and with policies/forms approved by the Department of Insurance.
    Registered preneed sales agent — definition
    Term
    Policy Summary
    PayerAlabama Department of Insurance
    PolicyCompliance with Alabama insurance laws in connection with preneed sales
    Policy CodePolicy N/A
    Change TypeNo material changes
    Effective DateAug 1, 2008
    Next Review DateN/A
    Key ActionEnsure any agent who solicits, negotiates, or sells individual life insurance incident to a preneed contract is properly licensed and appointed by the insurer before commissions are paid.
    SourceLink
    On This Page
    Life Insurance Funding — Compliance CriteriaPolicy Coding / Not Applicable CodesAgent and Provider RequirementsKey Definitions

    An employee need not hold an insurance producer license only if (i) the life insurance product offered is group life insurance, (ii) the employee's insurance-related activity is strictly limited and incidental to the preneed sale, and (iii) the employee is not paid a commission for that activity.

    • Product must be group life insurance.
    • Activity must be strictly limited and incidental to the preneed sale.
    • Employee must not be paid a commission for the insurance-related activity.
    Registered preneed sales agent (or other employee)
    DefinitionAn individual who engages in the solicitation, negotiation, or sale of an individual life insurance policy incident to the sale of a preneed contract.
    Licensing requirementMust be properly licensed as an insurance producer and properly appointed by the insurance company whose product is offered.
    Employer responsibilitiesIf the preneed provider is an artificial legal entity, at least one employee must hold an individual producer license and be designated as responsible for the entity's compliance with insurance laws.
    Compensation conditionAppropriate licensing is a pre-condition to payment and receipt of commissions for the sale of insurance.
    Life insurance funding — definition
    TermLife insurance funding
    DefinitionUse of an individual or group life insurance policy to fund the purchase price of a preneed funeral or cemetery contract as an alternative to depositing funds in a merchandise and services trust.
    Authorized carriers and approvalLife insurance may only be offered through insurance companies authorized by the Commissioner to write life insurance in Alabama; all policies and related forms must be submitted to and approved by the Department before use.
    ApplicabilityPermitted funding mechanism under the Alabama Preneed Funeral and Cemetery Act for preneed contracts covering funeral or cemetery merchandise and services.