Bill Text: CT SB00959 | 2013 | General Assembly | Comm Sub

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Bill Title: An Act Concerning The Grace Period For Life Insurance Policies And Designation Of Third Parties To Receive Cancellation Notices.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2013-05-17 - House Calendar Number 604 [SB00959 Detail]

Download: Connecticut-2013-SB00959-Comm_Sub.html

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General Assembly		Raised Bill No. 959
January Session, 2013		LCO No. 2955
		*_____SB00959INS___030813____*
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)

AN ACT CONCERNING THE GRACE PERIOD FOR LIFE INSURANCE POLICIES AND DESIGNATION OF THIRD PARTIES TO RECEIVE CANCELLATION NOTICES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-430 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):

(a) No life insurance policy or annuity [policy or] contract shall be delivered or issued for delivery to any person in this state, nor shall any application, rider or endorsement be used in connection therewith, until a copy of the form thereof shall have been filed with and approved by the commissioner. The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, establishing a procedure for review of such policies and contracts. The commissioner shall issue an order disapproving the use of any such form at any time if it does not comply with the requirements of law, or if it contains a provision or provisions that are unfair or deceptive or that encourage misrepresentation of the policy. The commissioner shall specify the reason for the commissioner's disapproval. The provisions of section 38a-19 shall apply to any such order issued by the commissioner.

(b) Any such life insurance policy delivered, issued for delivery, renewed, amended or endorsed on or after October 1, 2013, shall provide a grace period of at least sixty days for premium payments. If such policy becomes a claim during the grace period before the overdue payment is made, the amount of such overdue payment may be deducted from any settlement under such policy.

(c) (1) Each insurer that delivers, issues for delivery or renews a life insurance policy on or after October 1, 2013, in this state shall include with the policy a conspicuous statement specifying that the insured may designate a third party to receive notice of cancellation of the policy based on nonpayment of premium. The statement shall include a designation form and mailing address the insured may use to designate a third party. Such statement shall be in a form approved by the Insurance Commissioner.

(2) No designation form shall be effective unless it contains a written acceptance by the third party designee to receive copies of notices of cancellation from the insurer on behalf of the insured. The third party designation shall be effective not later than ten business days after the date the insurer receives the designation form and the acceptance of the third party. The third party may terminate the status as a third party designee by providing written notice to both the insurer and the insured. The insured may terminate the third party designation by providing written notice to the insurer and the third party designee. The insurer may require the insured and the third party to send the notices to the insurer by certified mail, return receipt requested.

(3) The insurer's transmission to the third party designee of a copy of a notice of cancellation based on nonpayment of premium shall be in addition to the transmission of the original document to the insured. When a third party is so designated all such notices and copies shall be mailed in an envelope clearly marked on its face with the following: "IMPORTANT INSURANCE POLICY INFORMATION: OPEN IMMEDIATELY". The copy of the notice of cancellation transmitted to the third party shall be governed by the same law and policy provisions that govern the notice being transmitted to the insured. The designation of a third party shall not constitute acceptance of any liability on the part of the third party or insurer for services provided to the insured.

[(b)] (d) Nothing in this chapter shall preclude the issuance of a life insurance [contract] policy including, but not limited to, a long-term care policy as provided in section 38a-458, that includes an optional health insurance rider, provided the optional health insurance rider is filed with and approved by the Insurance Commissioner pursuant to section 38a-481. Any company offering such policies for sale in this state shall be licensed to sell health insurance in this state pursuant to the provisions of section 38a-41.

Sec. 2. Section 38a-639 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):

(a) No life benefit certificate may be delivered or issued for delivery in this state unless a copy of the form has been filed with, and approved by, the commissioner.

(b) The certificate shall contain in substance the following standard provisions or, in lieu thereof, provisions which are more favorable to the member: (1) Title on the face and filing page of the certificate clearly and correctly describing its form; (2) a provision stating the amount of rates, premiums or other required contributions, by whatever name known, which are payable by the insured under the certificate; (3) (A) for a certificate delivered or issued for delivery prior to October 1, 2013, a provision that the member is entitled to a grace period of not less than a full month, or thirty days at the option of the society, in which the payment of any premium, after the first, may be made, and (B) for a certificate delivered, issued for delivery, renewed, amended or endorsed on or after October 1, 2013, a provision that the member is entitled to a grace period of not less than sixty days in which the payment of any premium, after the first, may be made. During such grace period under subparagraph (A) or (B) of this subdivision, the certificate shall continue in full force, but, in case the certificate becomes a claim during the grace period before the overdue payment is made, the amount of such overdue payment or payments may be deducted in any settlement under the certificate; (4) a provision that the member shall be entitled to have the certificate reinstated at any time within three years from the due date of the premium in default, unless the certificate has been completely terminated through the application of a nonforfeiture benefit, cash surrender value or certificate loan, upon the production of evidence of insurability satisfactory to the society and the payment of all overdue premiums and any other indebtedness to the society upon the certificate, together with interest on such premiums and such indebtedness, if any, at a rate not exceeding six per cent per annum compounded annually; (5) except in the case of pure endowment, annuity or reversionary annuity contracts, reducing term insurance contracts, or contracts of term insurance of uniform amount of fifteen years or less expiring before age sixty-six, a provision that, in the event of default in payment of any premium after three full years' premiums have been paid or after premiums for a lesser period have been paid if the contract so provides, the society will grant, upon proper request not later than sixty days after the due date of the premium in default, a paid-up nonforfeiture benefit on the plan stipulated in the certificate, effective as of such due date. The certificate may provide, if the society's laws so specify or if the member so elects prior to the expiration of the grace period of any overdue premium, that default shall not occur so long as premiums can be paid under the provisions of an arrangement for automatic premium loan as may be set forth in the certificate; (6) a provision that one paid-up nonforfeiture benefit as specified in the certificate shall become effective automatically unless the member elects another available paid-up nonforfeiture benefit, not later than sixty days after the due date of the premium in default; (7) a statement of the mortality table and rate of interest used in determining all paid-up nonforfeiture benefits and cash surrender options available under the certificate, and a brief general statement of the method used in calculating such benefits; (8) a table showing in figures the value of every paid-up nonforfeiture benefit and cash surrender option available under the certificate for each certificate anniversary either during the first twenty certificate years or during the term of the certificate, whichever is shorter; (9) a provision that the certificate shall be incontestable after it has been in force during the lifetime of the member for a period of two years from its date of issue except for nonpayment of premiums, violation of the provisions of the certificate relating to military, aviation or naval service and violation of the provisions relating to suspension or expulsion as substantially set forth in the certificate. At the option of the society, supplemental provisions relating to benefits in the event of temporary or permanent disability or hospitalization and provisions which grant additional insurance specifically against death by accident or accidental means may also be excepted. The certificate shall be incontestable on the ground of suicide after it has been in force during the lifetime of the member for a period of two years from the date of issue. The certificate may provide, as to statements made to procure reinstatement, that the society shall have the right to contest a reinstated certificate within a period of two years from the date of reinstatement with the same exceptions as herein provided; (10) a provision that in case the age or sex of the member or of any other person is considered in determining the premium and it is found at any time before final settlement under the certificate that the age or sex has been misstated, and the discrepancy and premium involved have not been adjusted, the amount payable shall be such as the premium would have purchased at the correct age and sex; but, if the correct age was not an insurable age under the society's charter or laws, only the premiums paid to the society, less any payments previously made to the member, shall be returned or, at the option of the society, the amount payable under the certificate shall be such as the premium would have purchased at the correct age according to the society's promulgated rates and any extension thereof based on actuarial principles; (11) a provision or provisions which recite fully, or which set forth the substance of, all sections of the charter, constitution, laws, rules or regulations of the society, in force at the time of issuance of the certificate, the violation of which will result in the termination of, or in the reduction of, the benefit or benefits payable under the certificate; (12) if the constitution or laws of the society provide for expulsion or suspension of a member, any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentations in such member's application for membership, shall have the privilege of maintaining his insurance in force by continuing payment of the required premium; and (13), in the case of a certificate issued by a foreign or alien society, a provision that the rights or obligations of the member or of any person rightfully claiming under the certificate shall be governed by the laws of this state. Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance or because the certificate is an annuity certificate may, to the extent inapplicable, be omitted from the certificate.

(c) No life benefit certificate shall be delivered or issued for delivery in this state containing in substance any of the following provisions: (1) Any provision limiting the time within which any action at law or in equity may be commenced to less than two years after the cause of action shall accrue; (2) any provision by which the certificate purports to be issued or to take effect more than six months before the original application for the certificate was made, except in case of transfer from one form of certificate to another in connection with which the member is to receive credit for any reserve accumulation under the form of certificate from which the transfer is made; or (3) any provision for forfeiture of the certificate for failure to repay any loan thereon or to pay interest on such loan while the total indebtedness, including interest, is less than the loan value of the certificate.

This act shall take effect as follows and shall amend the following sections:
Section 1	October 1, 2013	38a-430
Sec. 2	October 1, 2013	38a-639

INS

Joint Favorable