Bill Text: CA SB426 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Annuities: cash surrender benefits.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2015-07-15 - Chaptered by Secretary of State. Chapter 100, Statutes of 2015. [SB426 Detail]

Download: California-2015-SB426-Amended.html

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BILL NUMBER: SB 426	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 14, 2015

INTRODUCED BY   Senator Leyva

                        FEBRUARY 25, 2015

   An act to  amend   repeal and add 
Section 10168.4 of the Insurance Code, relating to annuities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 426, as amended, Leyva. Annuities: cash surrender benefits.
   Existing law governs annuities and, for those insurance contracts
that provide cash surrender benefits, prescribes the cash surrender
benefit available prior to maturity. Existing law also requires the
death benefit under these contracts to be at least equal to the cash
surrender benefit.
   This bill would instead require the death benefit payable under
contracts issued  or delivered on or after January 1, 2016, 
to persons 65 years of age or older to be at least equal to the
annuity value or accumulation  value without  
value, excluding  any surrender charges or penalties upon death.
 The bill would also make technical changes. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 10168.4 of the  
Insurance Code   is repealed.  
   10168.4.  For contracts which provide cash surrender benefits,
such cash surrender benefits available prior to maturity shall not be
less than the present value as of the date of surrender of that
portion of the maturity value of the paid-up annuity benefit which
would be provided under the contract at maturity arising from
considerations paid prior to the time of cash surrender reduced by
the amount appropriate to reflect any prior withdrawals from or
partial surrenders of the contract, such present value being
calculated on the basis of an interest rate not more than 1 percent
higher than the interest rate specified in the contract for
accumulating the net considerations to determine such maturity value,
decreased by the amount of any indebtedness to the company on the
contract, including interest due and accrued, and increased by any
existing additional amounts credited by the company to the contract.
In no event shall any cash surrender benefit be less than the minimum
nonforfeiture amount at that time. The death benefit under such
contracts shall be at least equal to the cash surrender benefit.

   SEC. 2.    Section 10168.4 is added to the  
Insurance Code   , to read:  
   10168.4.  Contracts that provide cash surrender benefits shall
comply with all of the following:
   (a) Cash surrender benefits available prior to maturity shall not
be less than the present value as of the date of surrender of that
portion of the maturity value of the paid-up annuity benefit which
would be provided under the contract at maturity arising from
considerations paid prior to the time of cash surrender reduced by
the amount appropriate to reflect any prior withdrawals from or
partial surrenders of the contract.
   (b) For purposes of subdivision (d), the present value shall be
calculated on the basis of an interest rate that is not more than 1
percent higher than the interest rate specified in the contract for
accumulating the net considerations to determine the maturity value,
decreased by the amount of any indebtedness to the company on the
contract, including interest due and accrued, and increased by any
existing additional amounts credited by the company to the contract.
   (c) The cash surrender benefit shall not be less than the minimum
nonforfeiture amount.
   (d) (1) Except as otherwise provided in paragraph (2), the death
benefit shall be at least equal to the cash surrender benefit.
   (2) For contracts issued or delivered on or after January 1, 2016,
to persons who are 65 years of age or older, the death benefit shall
be at least equal to the annuity value or accumulation value,
excluding any surrender charges or penalties upon death. 

  SECTION 1.    Section 10168.4 of the Insurance
Code is amended to read:
   10168.4.  For contracts which provide cash surrender benefits, the
cash surrender benefits available prior to maturity shall not be
less than the present value as of the date of surrender of that
portion of the maturity value of the paid-up annuity benefit which
would be provided under the contract at maturity arising from
considerations paid prior to the time of cash surrender reduced by
the amount appropriate to reflect any prior withdrawals from or
partial surrenders of the contract, the present value being
calculated on the basis of an interest rate not more than 1 percent
higher than the interest rate specified in the contract for
accumulating the net considerations to determine the maturity value,
decreased by the amount of any indebtedness to the company on the
contract, including interest due and accrued, and increased by any
existing additional amounts credited by the company to the contract.
The cash surrender benefit shall not be less than the minimum
nonforfeiture amount at that time. The death benefit under these
contracts shall be at least equal to the cash surrender benefit,
except that the death benefit payable under contracts issued to
persons 65 years of age or older shall be at least equal to the
annuity value or accumulation value without any surrender charges or
penalties upon death.