Bill Text: CA SB713 | 2011-2012 | Regular Session | Amended

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

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Bill Title: Insurance: proceeds: disclosure.

Spectrum: Bipartisan Bill

Status: (Passed) 2011-07-26 - Chaptered by Secretary of State. Chapter 130, Statutes of 2011. [SB713 Detail]

Download: California-2011-SB713-Amended.html

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BILL NUMBER: SB 713	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 4, 2011
	AMENDED IN SENATE  MARCH 31, 2011

INTRODUCED BY    Committee on Insurance   (
  Senators Calderon (Chair), Anderson, Corbett,
Correa, Gaines, Lowenthal, Price, and Wyland   )
  Senator   Calderon 
    (   Coauthors:   Senators  
Anderson,   Corbett,   Correa,   Gaines,
  Lowenthal,   and Wyland   ) 

                        FEBRUARY 18, 2011

   An act to add Article 11 (commencing with Section 10509.930) to
Chapter 5 of Part 2 of Division 2 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 713, as amended,  Committee on Insurance  
Calderon  . Insurance: proceeds: disclosure.
   Existing law requires insurers to fulfill certain requirements
with regard to life insurance policies.
   This bill, the Life Insurance Proceeds Disclosure Act of 2011,
would require insurers to provide written disclosures to life
insurance beneficiaries, as specified, at the time a claim is made
and before a retained asset account, as defined, is selected or
established as the benefit payment. The bill would require an insurer
that  chooses to settle  settles  life
insurance benefits through a retained asset account to provide the
beneficiary with a supplemental contract that clearly discloses the
rights of the beneficiary and the obligations of the insurer under
the supplemental contract.
   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.  Article 11 (commencing with Section 10509.930) is added
to Chapter 5 of Part 2 of Division 2 of the Insurance Code, to read:


      Article 11.  Life Insurance Proceeds Disclosure Act of 2011


   10509.930.  This act shall be known and may be cited as the Life
Insurance Proceeds Disclosure Act of 2011.
   10509.931.  The Legislature finds and declares all of the
following:
   (a) The occasion of the death of a spouse, parent, child, partner,
or other loved one is a difficult time, accompanied by severe
emotional stress, and is frequently a time of important and often
difficult financial decisions.
   (b) Life insurance is intended to provide an important resource to
support and ease financial decisions at such a time.
   (c) While life insurance policies may provide for a single payment
of the death benefit, policies may also offer alternative payout
options, including the use of a retained asset account that can
provide desired flexibility and fit the consumer's needs and the
needs of the consumer's family.
   (d) The inherent difficulty of financial decisions at such a time
may be eased if consumers know what their available payment options
are so they can receive the benefit of available life insurance
policy proceeds in the form best suited to their circumstances and
needs.
   10509.932.  The purpose of this act is to establish disclosure
standards regarding the payment of life insurance benefits to a
beneficiary by means of a retained asset account if a life insurance
company offers consumers a retained asset account or establishes such
an account as an alternative to the receipt of insurance proceeds by
a single payment made directly to the beneficiary that satisfies all
of the benefits owed to the beneficiary.
   10509.933.  For the purposes of this article, the following terms
have the following definitions:
   (a) "Insurer" means an insurance company that delivers or issues
for delivery in this state any policy of individual or group life
insurance.
   (b) "Retained asset account" means any mechanism where the
settlement of proceeds payable under a life insurance policy is
accomplished by the insurer, or an entity acting on behalf of the
insurer, by depositing the proceeds into an account with check or
draft writing privileges, and where those proceeds are retained by
the insurer, pursuant to a supplementary contract not involving
annuity benefits.
   10509.934.  The insurer shall provide the beneficiary of life
insurance proceeds, at the time a claim is made, written information
describing the settlement options available under the policy and any
other option available to the beneficiary for the receipt of
proceeds, including retained asset accounts, and how to obtain
specific details relevant to those options. If a retained asset
account is one of the available options, the written information
shall include all of the disclosures required by Section 10509.936.
   10509.935.  If the insurer  chooses to settle 
 settles  life insurance benefits through a retained asset
account, the insurer shall provide the beneficiary with a
supplemental contract that clearly discloses the rights of the
beneficiary and the obligations of the insurer under the supplemental
contract.
   10509.936.  The insurer shall provide the following written
disclosures to the beneficiary before the retained asset account is
 selected, if optional, or established:  
established, unless the insurer has already provided these
disclosures pursuant to Section 10509.934: 
   (a) Payment of the full benefit is accomplished by delivery of the
draft book or checkbook.
   (b) One draft or check may be written to access the entire amount,
including interest, of the retained asset account at any time.
   (c) Whether the available settlement options are preserved until
the entire balance is withdrawn or the balance drops below the
insurer's minimum balance requirements.
   (d) A statement identifying the account as either a checking or
draft account and an explanation of how the account works  ,
including, but not limited to, any minimum check or draft amount
requirements  .
   (e) Information about the account services provided and contact
information where the beneficiary may request and obtain more details
about those services.
   (f) A description of  any  fees charged, if applicable.
   (g) The frequency of statements showing the current account
balance, the interest credited, drafts or checks written, and any
other account activity.  The insurer shall send the beneficiary
at least one statement per quarter, and a statement for any month in
which there has been account activity other than just the crediting
of interest. 
   (h) The minimum interest rate to be credited to the account and
how the actual interest rate will be determined.
   (i) That the interest earned on the account may be taxable.
   (j) Retained asset account funds held by insurance companies are
not guaranteed by the Federal Deposit Insurance Corporation 
(FDIC)  , but are guaranteed by  the State Guaranty
Associations   State Guaranty Associations, and that the
State Guaranty Association coverage limits vary by state .

   (k) To learn more about the coverage limitations applicable to his
or her account, the beneficiary should contact the National
Organization of Life and Health Insurance Guaranty Associations,
www.nolhga.com.  
   (k) A statement that advises the beneficiary to contact the
National Organization of Life and Health Insurance Guaranty
Associations (NOLHGA) to learn more about the coverage limitations
applicable to his or her account, and that provides the beneficiary
with the current Internet Web site address and telephone number for
NOLHGA. 
   (l) A description of the insurer's policy regarding retained asset
accounts that become inactive, including the policy with respect to
inactive accounts that are at risk of escheating to the state
pursuant to the California Unclaimed Property Law (Chapter 7 (
commencing with Section 1500) of Title 10 of Part 3 of the Code of
Civil Procedure).