Bill Text: CT SB00172 | 2011 | General Assembly | Comm Sub
Bill Title: An Act Concerning Disclosures For Certain Life Insurance Policy Owners.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-02-17 - Public Hearing 02/22 [SB00172 Detail]
Download: Connecticut-2011-SB00172-Comm_Sub.html
General Assembly |
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January Session, 2011 |
LCO No. 3033 | ||
*03033SB00172INS* | |||
Referred to Committee on Insurance and Real Estate |
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Introduced by: |
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(INS) |
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AN ACT CONCERNING DISCLOSURES FOR CERTAIN LIFE INSURANCE POLICY OWNERS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 38a-436 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):
[Every] (a) Each individual life insurance policy delivered or issued for delivery to any person in this state shall have printed thereon or attached thereto a notice stating, in substance, that the policy may be returned by the applicant for cancellation by delivering or mailing the policy to the insurer or to the insurance agent through whom it was effected, at any time within ten days after receipt of the policy by the applicant, and that upon the delivery or mailing the policy shall be void ab initio.
(b) (1) Each insurer that delivers or issues for delivery an individual life insurance policy to any person in this state shall provide to such person a written notice when such person:
(A) Is sixty years of age or older or is known by the insurer to have suffered a qualifying event, as defined in section 38a-457, as amended by this act; and
(B) (i) Requests the surrender, in whole or in part, of such policy, (ii) requests an accelerated death benefit under such policy, (iii) is notified by the insurer that such policy may lapse, provided the insurer shall not be required to provide the written notice set forth in this subdivision more than once in a twelve-month period from the date of the first notice of lapse, or (iv) at any other time the Insurance Commissioner may prescribe by regulations adopted pursuant to chapter 54.
(2) The commissioner shall adopt regulations, in accordance with chapter 54, to prescribe the form of the written notice set forth in subdivision (1) of this subsection. Such written notice shall include:
(A) A statement explaining that life insurance is a critical part of a broader financial plan;
(B) A statement explaining that there are alternatives to the lapse or surrender of such policy;
(C) A general description of the following alternatives to the lapse or surrender of such policy:
(i) Accelerated death benefits available under such policy or as a rider to such policy;
(ii) The assignment of such policy;
(iii) The entry into a life settlement contract for such policy, including a statement that such contract is a regulated transaction in the state and subject to the requirements of sections 38a-465 to 38a-465q, inclusive;
(iv) The replacement of such policy;
(v) The maintenance of such policy pursuant to the terms of such policy or a rider to such policy;
(vi) The maintenance of such policy through loans issued by an insurer or third party, using such policy or the cash surrender value of such policy as collateral for such loan; and
(vii) Conversion of such policy from a term life to a whole life plan; and
(D) A statement that the availability of alternatives to the lapse or surrender of a life insurance policy are dependent on a number of circumstances and that such person should seek assistance from a licensed insurance producer or agent, a financial or professional tax advisor or an attorney.
(3) Failure by an insurer to provide the written notice as set forth in subdivision (1) of subsection (b) of this section shall be deemed an unfair practice under section 38a-816.
Sec. 2. Subsection (e) of section 38a-457 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):
(e) All accelerated benefits policies shall comply with the following disclosure requirements:
(1) The face of every accelerated benefits policy shall contain: (A) A description of coverage which uses the terminology "accelerated", and (B) the following statement: "Benefits as specified under this policy will be reduced upon receipt of an accelerated benefit."
(2) [Disclosure is required] The insurer shall disclose, at the time of application and at the time the accelerated benefits payment request is submitted by the insured, [of] the potential tax implications of receiving this payout. The disclosure statement shall indicate that the receipt of accelerated benefits may be taxable and that the insured should seek assistance from [their] such insured's personal tax advisor. Such disclosure shall be prominently displayed on the first page of the policy.
(3) Prior to or concurrent with the application, the insurer shall provide to the applicant [shall be given] a written disclosure including, but not limited to, a brief description of the accelerated benefit, the effect of the payment of an accelerated benefit on the policy's cash value, death benefit, premium, policy loans and policy liens, and definitions of the conditions or occurrences triggering payment of the accelerated benefits. In the event of direct mail solicitation, the insurer shall provide such disclosure [shall be made] upon acceptance of the application by such insurer.
(4) The insurer shall disclose in its solicitation any separate identifiable premium for the accelerated benefit. Those insurers indicating that this accelerated benefit is offered without additional premium shall furnish a written explanation to the Insurance Commissioner when filing the product.
(5) (A) Prior to or concurrent with the insured's request for accelerated death benefits, the [applicant] insurer shall [be given] provide to such insured an illustration demonstrating the effect of the payment of an accelerated benefit on the policy's cash value, death benefit, premium, policy loans and policy liens.
(B) Upon receiving a request for accelerated death benefits from an insured, the insurer shall provide to such insured the written notice described in subdivision (2) of subsection (b) of section 38a-436, as amended by this act. Such written notice shall be in addition to any disclosures required under this section.
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
October 1, 2011 |
38a-436 |
Sec. 2 |
October 1, 2011 |
38a-457(e) |
Statement of Purpose:
To require insurers to provide certain disclosures, recommended by the National Conference of Insurance Legislators, to certain life insurance policy owners.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]