S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7306

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              May 10, 2013
                               ___________

Introduced by M. of A. CAHILL -- read once and referred to the Committee
  on Insurance

AN  ACT  to amend the insurance law, in relation to life insurance poli-
  cies that credit additional amounts in accordance with an equity index

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subparagraph  (A)  of  paragraph  8  of subsection (a) of
section 3203 of the insurance law is amended to read as follows:
  (A) that the policyholder shall be entitled to a loan at any time  the
policy  is in force in an amount not exceeding the loan value, and under
the conditions, specified in section four thousand two  hundred  twenty-
two  of this chapter, provided three full years' premiums have been paid
or, in the case of policies that provide that the policyholder may  vary
the  amount  and  frequency of premiums to be paid to the insurer, after
three years from the issue of the  policy,  if  the  policy  is  not  in
default,  PROVIDED THAT POLICIES CREDITING ADDITIONAL AMOUNTS IN ACCORD-
ANCE WITH AN EQUITY INDEX SHALL BE ENTITLED TO A LOAN,  ELECTED  BY  THE
POLICY  OWNER,  AT  ANY TIME DURING THE EQUITY INDEX PERIOD AND THAT, IN
THE EVENT THAT A POLICY LOAN THAT REDUCES THE ACCOUNT VALUE  IS  ELECTED
PRIOR  TO  THE  END  OF  THE EQUITY INDEX PERIOD, THE ADDITIONAL AMOUNTS
DETERMINED AT THE END OF THE  EQUITY  INDEX  PERIOD  SHALL  REFLECT  THE
CHANGE IN ACCOUNT VALUES DURING SUCH EQUITY INDEX PERIOD;
  S  2.  Paragraph 14 of subsection (a) of section 3203 of the insurance
law is amended to read as follows:
  (14) (A) in any policy under which additional amounts may be  credited
for  any  period pursuant to subsection (b) of section four thousand two
hundred thirty-two of this chapter, that states that the  insurer  shall
credit  any  such  amount  no  less frequently than annually during such
period; PROVIDED THAT ANY POLICY  THAT  CREDITS  ADDITIONAL  AMOUNTS  IN
ACCORDANCE WITH AN EQUITY INDEX SHALL STATE THAT THE INSURER SHALL CRED-
IT ANY SUCH AMOUNT NO LESS FREQUENTLY THAN EVERY THREE YEARS, AND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06624-02-3
              

A. 7306                             2

  (B) THAT ANY POLICY CREDITING ADDITIONAL AMOUNTS IN ACCORDANCE WITH AN
EQUITY  INDEX  LESS  FREQUENTLY THAN ANNUALLY SHALL ALSO OFFER AN OPTION
THAT CREDITS ADDITIONAL AMOUNTS NO LESS FREQUENTLY THAN ANNUALLY.
  S 3. Subparagraph (I) of paragraph 2 of subsection (b) of section 3209
of  the  insurance law is relettered subparagraph (J) and a new subpara-
graph (I) is added to read as follows:
  (I) FOR A  LIFE  INSURANCE  POLICY  CREDITING  ADDITIONAL  AMOUNTS  IN
ACCORDANCE  WITH  AN  EQUITY INDEX LESS FREQUENTLY THAN ANNUALLY, STATE-
MENTS THAT NO ADDITIONAL AMOUNTS WILL BE CREDITED TO  THE  EQUITY  INDEX
ACCOUNT  OF  THE  POLICY IF THE POLICYHOLDER FULLY SURRENDERS THE POLICY
PRIOR TO THE EXPIRATION OF THE EQUITY INDEX  CREDITING  PERIOD,  SO  THE
POLICYHOLDER SHOULD CONSIDER OTHER ALTERNATIVES TO FULL SURRENDER BEFORE
THAT  PERIOD  EXPIRES, SUCH AS A POLICY LOAN OR A PARTIAL SURRENDER FROM
THE EQUITY INDEX ACCOUNT; AND
  S 4. Subsection (b) of section 3209 of the insurance law is amended by
adding a new paragraph 3 to read as follows:
  (3) A LIFE INSURANCE POLICY CREDITING ADDITIONAL AMOUNTS IN ACCORDANCE
WITH AN EQUITY INDEX LESS FREQUENTLY THAN ANNUALLY SHALL DISCLOSE TO THE
POLICYHOLDER AT THE TIME OF A REQUEST FOR FULL SURRENDER OF  THE  POLICY
BY  THE  POLICYHOLDER PRIOR TO THE EXPIRATION OF THE EQUITY INDEX PERIOD
THAT NO ADDITIONAL AMOUNTS WILL BE CREDITED TO THE EQUITY INDEX  ACCOUNT
OF  THE  POLICY IF THE POLICYHOLDER FULLY SURRENDERS THE POLICY PRIOR TO
THE EXPIRATION OF THE EQUITY INDEX PERIOD  SO  THE  POLICYHOLDER  SHOULD
CONSIDER  OTHER  ALTERNATIVES  TO  FULL  SURRENDER  BEFORE  THAT  PERIOD
EXPIRES, SUCH AS A POLICY LOAN OR A PARTIAL SURRENDER  FROM  THE  EQUITY
INDEX ACCOUNT.
  S  5.    The  opening  paragraph of paragraph 3 of subsection (n-1) of
section 4221 of the insurance law, as added by chapter 365 of  the  laws
of 1986, is amended to read as follows:
  A  policy  that meets the requirements of this subsection must provide
for cash surrender values that meet the requirements of either  subpara-
graph (A) or subparagraph (B) and comply with the provisions of subpara-
graphs (C) and (D) of this paragraph, PROVIDED THAT, FOR PARTIAL SURREN-
DERS UNDER POLICIES THAT CREDIT ADDITIONAL AMOUNTS IN ACCORDANCE WITH AN
EQUITY  INDEX  LESS  FREQUENTLY  THAN  ANNUALLY,  THE ADDITIONAL AMOUNTS
DETERMINED AT THE END OF THE  EQUITY  INDEX  PERIOD  SHALL  REFLECT  THE
CHANGE IN ACCOUNT VALUES DURING SUCH EQUITY INDEX PERIOD.
  S 6. This act shall take effect immediately.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7306--A

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              May 10, 2013
                               ___________

Introduced by M. of A. CAHILL -- read once and referred to the Committee
  on  Insurance -- committee discharged, bill amended, ordered reprinted
  as amended and recommitted to said committee

AN ACT to amend the insurance law, in relation to life  insurance  poli-
  cies that credit additional amounts in accordance with an equity index

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subparagraph (A)  of  paragraph  8  of  subsection  (a)  of
section 3203 of the insurance law is amended to read as follows:
  (A) [that the policyholder shall be entitled to a loan at any time the
policy  is in force in an amount not exceeding the loan value, and under
the conditions, specified in section four thousand two  hundred  twenty-
two  of this chapter, provided three full years' premiums have been paid
or, in the case of policies that provide that the policyholder may  vary
the  amount  and  frequency of premiums to be paid to the insurer, after
three years from the issue of the  policy,  if  the  policy  is  not  in
default]  THAT,  FOR A POLICY NOT IN DEFAULT AND WHERE THREE FULL YEARS'
PREMIUMS HAVE BEEN PAID OR, IN THE CASE OF A POLICY  WHERE  THE  POLICY-
HOLDER  MAY  VARY THE AMOUNT AND FREQUENCY OF PREMIUMS TO BE PAID TO THE
INSURER, AFTER THREE YEARS FROM THE DATE OF ISSUE  OF  THE  POLICY,  THE
POLICYHOLDER  SHALL BE ENTITLED TO A LOAN IN AN AMOUNT NOT EXCEEDING THE
LOAN VALUE, UNDER THE CONDITIONS SPECIFIED IN SECTION FOUR THOUSAND  TWO
HUNDRED  TWENTY-TWO  OF  THIS  CHAPTER. HOWEVER, A POLICYHOLDER SHALL BE
ENTITLED TO A LOAN FROM AN EQUITY INDEX ACCOUNT THAT CREDITS  ADDITIONAL
AMOUNTS LESS FREQUENTLY THAN ANNUALLY AT ANY TIME THE EQUITY INDEX POLI-
CY HAS A LOAN VALUE;
  S  2.  Paragraph 14 of subsection (a) of section 3203 of the insurance
law is amended to read as follows:
  (14) in any policy under which additional amounts may be credited  for
any  period  pursuant  to  subsection  (b)  of section four thousand two
hundred thirty-two of this chapter, [that states that the insurer  shall

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06624-04-3
              

A. 7306--A                          2

credit  any  such  amount  no  less frequently than annually during such
period.] THAT THE POLICY SHALL STATE THE FREQUENCY AT  WHICH  ADDITIONAL
AMOUNTS  ARE  CREDITED, WHICH SHALL BE NO LESS FREQUENTLY THAN ANNUALLY,
EXCEPT  THAT  POLICIES THAT CREDIT ADDITIONAL AMOUNTS IN AN EQUITY INDEX
ACCOUNT MAY DO SO IN SUCH ACCOUNT NO LESS FREQUENTLY  THAN  EVERY  THREE
YEARS;
  S 3. Subsection (e) of section 3203 is relettered subsection (f) and a
new subsection (e) is added to read as follows:
  (E)  FOR  POLICIES  THAT  CREDIT ADDITIONAL AMOUNTS IN AN EQUITY INDEX
ACCOUNT LESS FREQUENTLY THAN ANNUALLY: (1) IF THE POLICY HOLDER REQUESTS
A FULL SURRENDER OF A POLICY PRIOR TO THE EXPIRATION OF THE EQUITY INDEX
CREDITING PERIOD, THE INSURER SHALL PROVIDE A STATEMENT TO  THE  POLICY-
HOLDER,  PRIOR  TO PROCESSING THE SURRENDER, TO THE EFFECT THAT:  (A) NO
ADDITIONAL INTEREST BASED ON THE EQUITY INDEX WILL  BE  CREDITED,  SINCE
THE EQUITY INDEX CREDITING PERIOD HAS NOT YET EXPIRED, AND THAT ONLY THE
GUARANTEED INTEREST WILL BE CREDITED TO THE ACCOUNT; AND (B) THE POLICY-
HOLDER  IS  ADVISED  TO CONSIDER ALTERNATIVES TO A FULL SURRENDER OF THE
POLICY PRIOR TO THE CREDITING OF ADDITIONAL INTEREST BASED ON THE EQUITY
INDEX, SUCH AS A POLICY LOAN OR, IF AVAILABLE, A PARTIAL  WITHDRAWAL  OF
THE  POLICY;  (2) IN DETERMINING THE ADDITIONAL AMOUNT TO BE CREDITED TO
THE POLICY IN  ACCORDANCE  WITH  AN  EQUITY  INDEX,  THE  INSURER  SHALL
INCLUDE,  IN  THE  CALCULATION  OF  THE  CREDIT,  ANY AMOUNTS WITHDRAWN,
INCLUDING FOR POLICY LOANS, FROM THE EQUITY INDEX ACCOUNT FOR THE PERIOD
OF TIME PRIOR TO THEIR WITHDRAWAL;  (3)  THE  POLICY  SHALL  INCLUDE  AN
OPTION  THAT  CREDITS  ADDITIONAL AMOUNTS AT LEAST ANNUALLY; AND (4) THE
POLICY MAY PROVIDE THAT THE AMOUNTS TO BE PAID UPON THE  EXERCISE  OF  A
POLICY  LOAN  MAY  BE  SECURED BY THE VALUE OF THE POLICY'S EQUITY INDEX
ACCOUNT OR BY THE GENERAL ACCOUNT OF THE INSURER.
  S 4. Subparagraph (H) of paragraph 2 of subsection (b) of section 3209
of the insurance law, as added by chapter 170 of the laws  of  2008,  is
amended,  subparagraph  (I)  is  relettered  subparagraph  (J) and a new
subparagraph (I) is added to read as follows:
  (H) a statement identifying the initial current and the minimum  upper
limit or cap on the indexed linked interest rate, if any; [and]
  (I)  FOR  A  LIFE  INSURANCE  POLICY  CREDITING  ADDITIONAL AMOUNTS IN
ACCORDANCE WITH AN EQUITY INDEX LESS FREQUENTLY THAN ANNUALLY, A  STATE-
MENT  TO  THE EFFECT THAT: IF THE POLICYHOLDER REQUESTS A FULL SURRENDER
OF A POLICY PRIOR TO THE EXPIRATION OF THE EQUITY INDEX CREDITING  PERI-
OD,  NO  ADDITIONAL  INTEREST BASED ON THE EQUITY INDEX WILL BE CREDITED
AND THAT ONLY THE GUARANTEED INTEREST WILL BE CREDITED TO  THE  ACCOUNT;
AND  THE  POLICYHOLDER  IS  ADVISED  TO  CONSIDER ALTERNATIVES TO A FULL
SURRENDER OF THE POLICY PRIOR TO THE  EXPIRATION  OF  THE  EQUITY  INDEX
CREDITING  PERIOD,  SUCH  AS  A  POLICY LOAN OR, IF AVAILABLE, A PARTIAL
WITHDRAWAL OF THE POLICY; AND
  S 5. This act shall take effect immediately.