senate Bill S6507A

Relates to accelerated death benefits under a life insurance policy

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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

See Assembly Version of this Bill:
A9154A
Versions:
S6507
S6507A
Legislative Cycle:
2013-2014
Law Section:
Insurance Law
Laws Affected:
Amd §3230, Ins L

Sponsor Memo

BILL NUMBER:S6507A

TITLE OF BILL: An act to amend the insurance law, in relation to
accelerated 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
prohibits life insurers from paying a policyholder an accelerated
death benefit until a period of five 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 requirement so that the accelerated death benefit applied
for by the policyholder 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
accelerated death benefit under a life insurance policy. Life
insurance policies 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, catastrophically 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 five 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,
experience 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 five
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--A

                            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  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

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]  FIVE 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 certif-
icate holder shall have the  right  to  rescind  the  request  for  such
payments  at  any  time during the process of application for said bene-
fits.
  S 2. This act shall take effect immediately.






 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13611-03-4

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