(a) This chapter applies only to burial insurance policies.

(b) For the purposes of this title, 'burial insurance' is that form of life insurance under which:

(1) Benefits are provided in the form of merchandise and services incident to the burial of the insured or the furnishing of a monument to the insured;

(2) The specified retail value of such merchandise and services does not exceed $1,500.00; and

(3) The words 'burial policy,' 'vault policy,' 'monument policy' or words of similar import are printed on the policy as a part of its description.

Each such policy shall have a space for the name of the beneficiary designated with a reservation of the right to designate or change the beneficiary after the issuance of the policy. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.

(a) There shall be a provision that any cash benefit provided by the policy upon the death of the insured will be payable upon receipt of due proof of death of the insured and, at the insurer's option, the surrender of the policy and premium receipt book.

(b) The policy may also provide for the payment of such benefit or any other cash benefit due under the policy to the beneficiary designated in the policy, or to the executor or administrator of the insured, or to any relative of the insured by blood, or legal adoption or connection by marriage or to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred expense for the maintenance, medical attention or burial of the insured.

There shall be a provision that no agent shall have the power or authority to waive, change or alter any of the terms or conditions of any policy; except, that, at the option of the insurer, the terms or conditions may be changed by an endorsement signed by a duly authorized officer of the insurer.

There shall be provisions for nonforfeiture benefits and cash surrender values as required by Section 27-15-28; except, that, with respect to benefits provided in the form of funeral or monument merchandise and services, the required minimum cash surrender values shall be two thirds of the cash surrender values which would be required for a cash life insurance policy having a face amount equal to the cash benefit provided in accordance with Section 27-17-9.

There shall be a title on the face of the policy briefly describing the same.

The following provisions of this title shall also apply as to burial insurance policies:

(1) Section 27-15-15;

(2) Section 27-15-24;

(3) Section 27-15-25;

(4) Section 27-15-29; and

(5) Section 27-16-16.

(a) Except as hereinafter provided, any authorized insurer who issues or has heretofore issued 'burial insurance' in this state shall value the life insurance reserve liabilities for such policies (hereinafter 'burial reserves') in accordance with the provisions of Section 27-36-7.

(b) An insurer shall increase the amount of insurance on which its burial reserves are based, not to exceed the retail value of such benefits as stated in the policies, when appropriate to reflect an increase in the costs to the insurer of providing the policy benefits. When an insurer shall increase the amount of insurance for this purpose, it shall be permitted to change the assumed interest rate and the valuation mortality table for computing such reserves, provided that the resulting reserves after such increase in amount of insurance and change in assumed interest rate or valuation mortality table, or both, shall not be less than the reserves before such changes, and provided further that the reserves shall not be less than those calculated using the minimum standards set forth below.

(c) The minimum standards for valuation of burial reserves under this chapter shall be:

(1) An assumed interest rate not exceeding six percent per annum;

(2) The commissioners 1961 standard industrial mortality table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by the commissioner for use in determining the minimum standard of valuation for such policies; and

(3) The commissioners reserve valuation method as defined by Section 27-36-7(e), as may be amended from time to time.

(d) Prior to the filing date of the annual statement for the year in which the insurer intends to change the assumed interest rate or the valuation mortality tables, or both, used in the valuation of burial reserves as permitted under this chapter, the insurer shall communicate in writing to the commissioner the valuation standards to be used in such calculation. The insurer shall as to each block of business specify the interest rate, mortality table, valuation method, and amount of insurance to be used in the reserve calculation. 'Block of business' shall mean a logical and identifiable grouping of policies as specified by the insurer in its written notice to the commissioner.

(e) Nothing in this chapter shall be construed as authorizing or requiring an increase in the retail value of the policies or in the nonforfeiture values, including the cash surrender values of subject burial insurance policies.

(f) To the extent that other laws or parts of laws may be construed as being applicable to the calculation of burial reserves, the provisions of this chapter shall take precedence over and supersede said provisions to the extent necessary to effectuate the intent of this chapter.

No policy of burial insurance shall be delivered or issued for delivery in this state unless it contains in substance the provisions set forth in Sections 27-17-3 through 27-17-14, or corresponding provisions, which in the opinion of the commissioner are not less favorable in any respect to the policyholder. Any of such provisions, or portions thereof, not applicable to single premium policies shall to that extent be omitted therefrom.

There shall be a provision that the insured is entitled to a grace period of four weeks within which the payment of any premium after the first may be made, except, that, in policies the premiums which are payable monthly or less often, the period of grace shall be one month but not less than 30 days, and that during the period of grace the policy shall continue in full force, but if during the grace period the policy becomes a claim, then any overdue premiums may be deducted from any cash payment which may be due under the policy.

There shall be a provision that the policy shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the policy when issued, a provision that the policy and the application therefor shall constitute the entire contract. If the application is so made a part of the contract, the policy shall also provide that all statements made by the applicant in such application shall, in the absence of fraud, be deemed to be representations and not warranties.

There shall be a provision, with respect to benefits provided in the form of merchandise and services incident to the burial of the insured, that the policy shall be incontestable from its date of issue except for nonpayment of premiums and, with respect to benefits payable in cash, monuments, waiver of premium benefits and disability benefits, a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue, except for nonpayment of premiums and except, at the option of the insurer, as to provisions relating to benefits in event of dismemberment or disability or to additional benefits for death by accident or accidental means.

(a) There shall be a provision that the policy may be reinstated at any time within two years after the date of default in the payment of any premium unless the policy has been surrendered for its cash value or the period of any extended insurance provided by the policy has expired, upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums with interest at a rate not exceeding six percent per annum compounded annually.

(b) Subsections (b) and (c) of Section 27-16-9 shall also apply as to burial insurance policies.

There shall be a provision that the insurer has contracted with and appointed an authorized funeral director or monument dealer in this state to furnish the merchandise and services provided by the policy. The policy may also provide that the term 'authorized funeral director' or 'authorized monument dealer' shall mean a funeral director or monument dealer authorized by the insurer at the time of the insured's death.

There shall be a provision that if the death of the insured or, if a vault or monument policy, the burial of the insured occurs within the State of Alabama and within a specified distance from an authorized funeral director or monument dealer of the insurer, the merchandise and services provided by the policy shall be furnished by such authorized funeral director or monument dealer upon the request of the beneficiary or other person having authority to make funeral arrangements.

There shall be a provision that if the death of the insured or, if a vault or monument policy, the burial of the insured occurs outside the State of Alabama or at a greater distance from an authorized funeral director or monument dealer of the insurer than that specified in Section 27-17-8, the insurer will, in lieu of furnishing such merchandise and services, pay a cash benefit of not less than one half of the specified retail value of the merchandise and services provided in the policy; provided, however, that the insurer may provide for a reduced benefit as to an insured less than one year of age at death. The policy may contain a provision for the payment of such cash benefit at the option of the insurer under any other circumstances where it is impractical for any reason to furnish the merchandise and services provided by the policy.