senate Bill S6507

Amended

Relates to accelerated death benefits under a life insurance policy

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Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 31 / Jan / 2014
    • REFERRED TO INSURANCE
  • 21 / May / 2014
    • AMEND AND RECOMMIT TO INSURANCE
  • 21 / May / 2014
    • PRINT NUMBER 6507A
  • 02 / Jun / 2014
    • 1ST REPORT CAL.1102
  • 03 / Jun / 2014
    • 2ND REPORT CAL.
  • 09 / Jun / 2014
    • ADVANCED TO THIRD READING
  • 20 / Jun / 2014
    • SUBSTITUTED BY A9154A

Summary

Relates to accelerated death benefits under a life insurance policy and the right of the policy owner or certificate holder to rescind the request for such payments at any time during the process of application for said benefits.

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Bill Details

Versions:
S6507
S6507A
Legislative Cycle:
2013-2014
Law Section:
Insurance Law
Laws Affected:
Amd §3230, Ins L

Sponsor Memo

BILL NUMBER:S6507

TITLE OF BILL: An act to amend the insurance law, in relation to accel-
erated death benefits under a life insurance policy

PURPOSE: This bill would amend subsection (c) of section 3230 of the
insurance law relating to the timing of the payment of an accelerated
death benefit by a life insurer.

SUMMARY OF PROVISIONS: Currently, § 3230(c) of the insurance law prohib-
its life insurers from paying a policyholder an accelerated death bene-
fit until a period of fourteen days after they have applied for receipt
of such benefit and been provided the disclosure and illustration
required pursuant to the section. This legislation deletes that require-
ment so that the accelerated death benefit applied for by the policy-
holder may be paid out in a more timely manner by the life insurer.

JUSTIFICATION: Section 3230 of the insurance law establishes the rules
that life insurers must follow when a policyholder applies for an accel-
erated death benefit under a life insurance policy. Life insurance poli-
cies that contain an accelerated death benefit provision authorize the
policyholder to apply to receive some portion of their life insurance
death benefit before they are deceased. Policies that provide this
option to policyholders are authorized to provide the accelerated death
benefit if the policyholder is determined to be terminally, catastroph-
ically or chronically (requiring long term care services) ill, as such
terms are described pursuant to § 1113(a)(1)(A)-(D) of the insurance
law. Section 3230(c) of the insurance law requires that life insurers
must suspend payment of the accelerated death benefit for a period of 14
days after the policyholder has applied to receive such benefit and
after the disclosure required has been provided to them.

This law was enacted over two decades ago and, since that time, experi-
ence has shown that policyholders rarely decline or reverse payment of
the accelerated death benefit after they have applied for the benefit.
To the contrary, policyholders have complained that they must wait for
the two week period to expire before they can receive payment of the
death benefit for which they had applied. All of the people applying for
this benefit are experiencing extreme difficulties with their health
status, either having been diagnosed with a terminal illness (life
expectancy of twelve months or less), a medical condition requiring
extraordinary medical care or receiving qualified long term care
services. They are often in need of the death benefit payment as quickly
as possible and are frequently displeased that they must wait for the
payment due to the requirements of the law.

This bill removes the requirement that a life insurer must wait 14 days
before payment of an accelerated death benefit and facilitates more
immediate payment to policyholders when they are most in need of that
payment.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

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

                                  6507

                            I N  S E N A T E

                            January 31, 2014
                               ___________

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  accelerated  death
  benefits under a life insurance policy

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

  Section 1. Subsection (c) of section 3230 of  the  insurance  law,  as
added by chapter 428 of the laws of 1991, is amended to read as follows:
  (c) [Insurers are prohibited from paying accelerated death benefits or
special surrender values to the policy owner or certificate holder for a
period of fourteen days from the date on which the information specified
in  subdivision  (d)  of  this  section is transmitted in writing to the
policy owner or certificate holder.] The  policy  owner  or  certificate
holder  shall have the right to rescind the request for such payments at
any time during the process of application for said benefits.
  S 2. This act shall take effect immediately.







 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13611-01-4

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