Bill Text: NY S05028 | 2011-2012 | General Assembly | Introduced

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Bill Title: Relates to settlement options for life insurance policies, requires life insurers to provide certain explanations to beneficiaries of such policies.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2012-01-04 - REFERRED TO INSURANCE [S05028 Detail]

Download: New_York-2011-S05028-Introduced.html

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                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         5028
                              2011-2012 Regular Sessions
                                   I N  S E N A T E
                                      May 2, 2011
                                      ___________
       Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
         printed to be committed to the Committee on Insurance
       AN ACT to amend the insurance law, in relation to disclosure related  to
         the settlement options for life insurance
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Section 3213 of the insurance law is  amended  to  read  as
    2  follows:
    3    S  3213.  Payment  of  proceeds. (A) Where the proceeds of a policy of
    4  life insurance delivered or issued for delivery in this state are  paya-
    5  ble, according to its terms, to two or more beneficiaries without desig-
    6  nation of their respective interests, the proceeds shall be paid to such
    7  beneficiaries in equal portions.
    8    (B)  (1)  AT THE TIME A CLAIM IS MADE, A LIFE INSURER SHALL PROVIDE TO
    9  THE BENEFICIARY OF  A  POLICY  OF  LIFE  INSURANCE  WRITTEN  INFORMATION
   10  DESCRIBING  THE SETTLEMENT OPTIONS AVAILABLE UNDER THE POLICY AND HOW TO
   11  OBTAIN SPECIFIC DETAILS RELEVANT TO THE OPTIONS.
   12    (2)(A) FOR THE PURPOSES OF THIS PARAGRAPH, THE  TERM  "RETAINED  ASSET
   13  ACCOUNT"  MEANS ANY MECHANISM WHEREBY THE SETTLEMENT OF PROCEEDS PAYABLE
   14  UNDER A LIFE INSURANCE POLICY IS ACCOMPLISHED BY THE LIFE INSURER OR  AN
   15  ENTITY ACTING ON BEHALF OF THE LIFE INSURER PLACING THE PROCEEDS INTO AN
   16  ACCOUNT  WITH CHECK OR DRAFT WRITING PRIVILEGES WHERE THOSE PROCEEDS ARE
   17  RETAINED BY THE LIFE INSURER PURSUANT TO A  SUPPLEMENTARY  CONTRACT  NOT
   18  INVOLVING ANNUITY BENEFITS.
   19    (B)  IF  THE  LIFE  INSURER  SETTLES BENEFITS THROUGH A RETAINED ASSET
   20  ACCOUNT, SUCH INSURER SHALL PROVIDE THE BENEFICIARY WITH A  SUPPLEMENTAL
   21  CONTRACT  THAT  CLEARLY  DESCRIBES THE RIGHTS OF THE BENEFICIARY AND THE
   22  OBLIGATIONS OF THE LIFE INSURER  UNDER  THE  SUPPLEMENTAL  CONTRACT.  IN
   23  ADDITION,  THE  FOLLOWING  WRITTEN  DISCLOSURES SHALL BE PROVIDED TO THE
   24  BENEFICIARY BEFORE A RETAINED ASSET ACCOUNT IS ESTABLISHED:
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD10607-02-1
       S. 5028                             2
    1    (I) A STATEMENT THAT PAYMENT OF THE  FULL  BENEFIT  AMOUNT  IS  ACCOM-
    2  PLISHED BY DELIVERY OF A DRAFT BOOK OR CHECK BOOK;
    3    (II)  A STATEMENT THAT ONE DRAFT OR CHECK MAY BE WRITTEN TO ACCESS THE
    4  ENTIRE AMOUNT, INCLUDING INTEREST, OF THE RETAINED ASSET ACCOUNT AT  ANY
    5  TIME;
    6    (III)  WHETHER  OTHER AVAILABLE SETTLEMENT OPTIONS ARE PRESERVED UNTIL
    7  THE ENTIRE BALANCE IS WITHDRAWN OR THE  BALANCE  DROPS  BELOW  THE  LIFE
    8  INSURER'S MINIMUM BALANCE REQUIREMENTS;
    9    (IV)  A STATEMENT IDENTIFYING THE ACCOUNT AS EITHER A CHECKING ACCOUNT
   10  OR A DRAFT ACCOUNT AND AN EXPLANATION OF HOW THE ACCOUNT WORKS;
   11    (V) INFORMATION ABOUT THE ACCOUNT SERVICES PROVIDED AND CONTACT INFOR-
   12  MATION WHERE THE BENEFICIARY MAY REQUEST AND OBTAIN MORE  DETAILS  ABOUT
   13  SUCH SERVICES;
   14    (VI) A DESCRIPTION OF FEES CHARGED, IF APPLICABLE;
   15    (VII)  INFORMATION RELATING TO THE FREQUENCY OF STATEMENTS SHOWING THE
   16  CURRENT ACCOUNT BALANCE, THE INTEREST CREDITED, DRAFTS OR  CHECKS  WRIT-
   17  TEN, AND ANY OTHER ACCOUNT ACTIVITY;
   18    (VIII)  INFORMATION REGARDING THE MINIMUM INTEREST RATE TO BE CREDITED
   19  TO THE ACCOUNT AND HOW THE ACTUAL INTEREST RATE WILL BE DETERMINED;
   20    (IX) A STATEMENT THAT THE INTEREST EARNED ON THE ACCOUNT MAY BE  TAXA-
   21  BLE;
   22    (X)  A  STATEMENT  THAT  RETAINED ASSET ACCOUNT FUNDS HELD BY THE LIFE
   23  INSURER ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION BUT
   24  ARE GUARANTEED BY THE STATE GUARANTY ASSOCIATION. THE BENEFICIARY SHOULD
   25  BE ADVISED TO CONTACT THE  NATIONAL  ORGANIZATION  OF  LIFE  AND  HEALTH
   26  INSURANCE GUARANTY ASSOCIATIONS TO LEARN MORE ABOUT THE COVERAGE LIMITA-
   27  TIONS TO THE ACCOUNT UNDER A STATE GUARANTY ASSOCIATION; AND
   28    (XI)  A  DESCRIPTION  OF  THE LIFE INSURER'S POLICY REGARDING RETAINED
   29  ASSET ACCOUNTS THAT BECOME INACTIVE.
   30    S 2. This act shall take effect on the one hundred eightieth day after
   31  it shall have become a law.