S T A T E O F N E W Y O R K
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7708--A
2011-2012 Regular Sessions
I N A S S E M B L Y
May 16, 2011
___________
Introduced by M. of A. MORELLE -- read once and referred to the Commit-
tee on Insurance -- recommitted to the Committee on Insurance in
accordance with Assembly Rule 3, sec. 2 -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
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
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10037-03-2
A. 7708--A 2
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 TWO YEARS, AND
(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.