NY Ins L § 3203 (2021)
2021 New York Laws ISC - Insurance Article 32 - Insurance Contracts - Life, Accident and Health, Annuities 3203 - Individual Life Insurance Policies; Standard Provisions as to Contractual Rights and Responsibilities of Policyholders and Insurers.

§  3203. Individual life insurance policies; standard provisions as to contractual rights and responsibilities of policyholders  and  insurers. (a)  All  life  insurance  policies,  except as otherwise stated herein, delivered or issued  for  delivery  in  this  state,  shall  contain  in substance   the   following   provisions,   or   provisions   which  the superintendent deems to be more favorable to policyholders:  (1) that, for policies in which the amount and frequency  of  premiums may  vary,  after  payment  of  the  first  premium, the policyholder is entitled to a sixty-one day grace period, beginning on the day when  the insurer  determines  that  the  policy's  net  cash  surrender  value is insufficient to pay the total charges necessary to keep  the  policy  in force  for  one  month  from  that  day,  within which to pay sufficient premium to keep the policy in force for three months from the  date  the insufficiency  was  determined. For all other policies, after payment of the first premium, the policyholder is  entitled  to  a  thirty-one  day grace  period  or of one month following any subsequent premium due date within which to make payment of the premium then due. During such  grace period, the policy shall continue in full force;  (2)  that  if  the death of the insured occurs within the grace period provided in the policy, the insurer may deduct from the policy  proceeds the  portion  of any unpaid premium applicable to the period ending with the last day of the policy month in which such death  occurred,  and  if the  death  of  the insured occurs during a period for which the premium has been paid, the insurer shall add to the policy proceeds a refund  of any  premium  actually  paid for any period beyond the end of the policy month in which such death occurred, provided such premium was not waived under  any  policy  provision  for  waiver  of  premiums  benefit.  This paragraph shall not apply to single premium or paid-up policies;  (3) that the policy shall be incontestable after being in force during the  life  of  the  insured  for  a period of two years from its date of issue, and that, if a policy provides that the death benefit provided by the policy may be increased, or other policy  provisions  changed,  upon the  application  of  the policyholder and the production of evidence of insurability, the policy with respect to each such  increase  or  change shall  be  incontestable after two years from the effective date of such increase or change, except in each case for nonpayment  of  premiums  or violation  of policy conditions relating to service in the armed forces. At the option of the insurer, provisions relating to benefits for  total and  permanent  disability  and additional benefits for accidental death may also be excepted;  (4) that the policy, together with the application therefor if a  copy of  such  application  is  attached  to  the  policy  when issued, shall constitute the entire contract between the parties; but in the  case  of policies  that provide that the death benefit or other policy provisions may be changed by written  application  or  by  the  written  notice  of exercise of one or more options provided in the policy, or automatically by the terms of the policy, the policy may also contain a provision that when  such  written  application  or  notice of exercise of an option is accepted by the insurer or a notice of  any  change  is  issued  by  the insurer  and,  in  each  case,  a  copy of such application or notice is returned by mail or delivered to the policyholder at the  policyholder's last  post  office  address  known  to  the insurer, such application or notice shall become part of the entire contract between the parties;  (5) that if the age of the insured  has  been  misstated,  any  amount payable  or  benefit  accruing  under  the  policy  shall be such as the premium would have purchased at the correct age;  (6) that the  insurer  shall  annually  ascertain  and  apportion  any divisible surplus accruing on the policy;  (7)  (A) that, in the case of policies which provide for the crediting of additional  amounts  pursuant  to  subsection  (b)  of  section  four thousand  two  hundred  thirty-two  of  this chapter or under which cash surrender  values  are  adjusted  in  accordance  with  a   market-value adjustment  formula  or  which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums or which provide  an  option for changes in benefits or premiums other than a change to a new policy, specifies  the  mortality  table,  interest  rate  and  method  used  in calculating cash surrender values and any paid-up nonforfeiture benefits available under the policy;  (B) that, in the case  of  all  other  policies,  specifies  the  cash surrender  values and other options available in the event of default in a premium payment after premiums have been paid for a specified  period, together  with a table showing, in figures, all options available during each of the policy's first twenty years. Such options shall comply  with the  requirements of subsection (a) of section four thousand two hundred twenty or section four thousand two hundred twenty-one of this chapter;  (8) (A) 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 policyholder 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 policy has a loan value;  (B)  that the sole security for the loan shall be assignment or pledge of the policy;  (C) that, unless the policy provides for the crediting  of  additional amounts  pursuant to subsection (b) of section four thousand two hundred thirty-two of this chapter or provides for the adjustment of the  policy loan  value  in  accordance  with  a  market-value adjustment formula or causes on a basis  guaranteed  in  the  policy  unscheduled  changes  in benefits  or  premiums  or provides an option for changes in benefits or premiums other than a change to a new policy, the policy shall contain a table showing the loan values, if any,  available  during  each  of  the policy's first twenty years;  (D)  that, in making a loan, the insurer may reduce the loan value (in addition to the indebtedness deducted in determining such value) by  any unpaid premium balance for the current policy year;  (E)  that,  if  the  loan  is  made or repaid on a date other than the anniversary of the policy, the insurer  may  collect  interest  for  the portion of the current policy year on a pro rata basis;  (F)  that,  at the option of the insurer, the loan shall bear interest (i) at a maximum rate of not more than seven and four-tenths per  centum per  annum  if  payable  in  advance or the equivalent effective rate of interest if otherwise payable, or (ii) at a rate not  in  excess  of  an adjustable  maximum rate established from time to time by the insurer as permitted by law. If the policy provides for  an  adjustable  rate,  the policy shall specify the regular intervals at which the interest rate is to  be  determined  which shall be at least once every twelve months but not more frequently than once in any three month period;  (G) the policy may further provide: (i) that if the  interest  on  the loan  is  not paid when due, it shall be added to the existing loan, and shall bear interest at the applicable rate or rates payable on the  loan determined  in  accordance  with  the provisions of the policy, and (ii) subject to subsection (e) of section three thousand two hundred  six  of  this  article  that when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount  of  the  policy's loan  value  and  if  at least thirty days' prior notice shall have been given  in  the  manner  provided  in  section three thousand two hundred eleven of this article, then the policy shall terminate and become void;  (H) any policy which provides for the crediting of additional  amounts pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred thirty-two of this chapter may also provide that if any indebtedness  is owed  to the insurer on any part of the loan value which would otherwise be credited with additional amounts,  such  additional  amounts  may  be reduced  so that the total amounts credited on such part are so credited at a rate that is up to two percent per annum less than  the  applicable loan  interest rate charged or at such other rate as the superintendent, upon the insurer's demonstrating justification therefor, may allow;  (I) this paragraph eight shall not apply to term insurance;  (J) this paragraph eight shall not apply to any policy  qualified  for special tax treatment under subsection (b) of section four hundred three of  the  Internal  Revenue  Code of 1986, as amended, to the extent such application would prevent such qualification;  (9) a table showing the  amounts  of  the  applicable  installment  or annuity  payments, if the policy proceeds are payable in installments or as an annuity;  (10) that the policy shall be reinstated  at  any  time  within  three years from the date of default, unless the cash surrender value has been exhausted  or  the  period  of  extended  insurance  has expired, if the policyholder  makes  application,  provides  evidence  of  insurability, including  good  health,  satisfactory  to the insurer, pays all overdue premiums with interest at a rate not exceeding six per centum per  annum compounded   annually,   and   pays   or  reinstates  any  other  policy indebtedness with interest at a rate not exceeding the applicable policy loan  rate  or  rates  determined  in  accordance  with   the   policy's provisions. This provision shall be required only if the policy provides for termination or lapse in the event of a default in making a regularly scheduled premium payment;  (11)  that  upon  surrender  of  the  policy,  together with a written request for cancellation, to the insurer during a  period  of  not  less than  ten  days  nor  more than thirty days from the date the policy was delivered to the policy owner, the insurer shall refund either  (i)  any premium  paid for the policy, including any policy fees or other charges or (ii) if the policy provides for the adjustment of the cash  surrender benefit  in accordance with a market-value adjustment formula and if the policy or a notice attached to it so provides, the amount  of  the  cash surrender  benefit  provided under the policy as so adjusted assuming no surrender charge plus the amount of all fees and other charges  deducted from  any premium paid or from the policy value; provided, however, that a policy sold by mail order must  contain  a  provision  permitting  the policy owner a thirty day period for such surrender. A provision to this effect shall appear in the policy or in a notice attached to it;  (12)  in  any  policy  under  which additional amounts may be credited pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred thirty-two  of  this  chapter,  that  states  the  guaranteed factors of mortality, expense and interest, and a statement of the method  used  by the insurer in calculating actual policy values;  (13)  in  any  policy  under  which additional amounts may be credited pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred thirty-two  of  this  chapter,  that  such  additional  amounts shall be nonforfeitable after the effective date of their  crediting  except  for any  charges  imposed  under the policy which are not greater than those  allowed under subsection (n-1)  or  any  market  value  adjustment  made pursuant  to  subsection  (n-2)  of  section  four  thousand two hundred twenty-one of this chapter; and  (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 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;  (15) that states on the policy data or policy specifications page of a participating  cash  value  policy that dividends are not guaranteed and the insurer has the right  to  change  the  amount  of  dividend  to  be credited  to  the  policy which may result in lower dividend cash values than were illustrated, or, if applicable, require more  premiums  to  be paid than were illustrated.  (16) that states on the policy data or policy specifications page of a life insurance policy subject to subsection (b) of section four thousand two  hundred  thirty-two of this chapter, to the extent applicable, that additional amounts are not guaranteed and the insurer has the  right  to change  the  amount of interest credited to the policy and the amount of cost of insurance or other expense charges  deducted  under  the  policy which  may  require  more premium to be paid than was illustrated or the cash values may be less than those illustrated.  (17) that states on the policy data or policy specification  page  the minimum  guarantee interest rate used to determine the guaranteed policy values.  (b) (1) A life insurance policy delivered or issued  for  delivery  in this  state  may  exclude  or  restrict  liability in the event of death occurring while the insured is resident in a specified  foreign  country or   countries,  but  shall  not  contain  any  provision  excluding  or restricting liability  in  the  event  of  death  caused  in  a  certain specified manner, except as a result of:  (A)  conditions  specified  in  subsection  (c) hereof, subject to the terms of such subsection;  (B) suicide within two years from the date of issue of the policy;  (C) aviation under conditions specified in the policy;  (D) hazardous occupations specified  in  the  policy,  provided  death occurs within two years from the date of issue of the policy.  (2)   The   superintendent  may  approve  provisions  that  vary  from subparagraphs (A) through (D) of paragraph one hereof and subsection (c) hereof, whenever he deems such substitute provisions to be substantially the same or more favorable to policyholders.  (3) If a death occurs that is subject to an exclusion  or  restriction pursuant  to this subsection or subsection (c) hereof, the insurer shall pay the reserve on the face amount of the policy, computed according  to the  mortality table and interest rate specified in the policy, together with the reserve for any paid-up additions thereto,  and  any  dividends standing  to  the  credit  of  the  policy, less any indebtedness to the insurer on the policy, including interest due or accrued; provided  that if  the policy shall have been in force for not more than two years, the insurer shall pay the amount of the gross premiums charged on the policy less dividends paid in cash or used in the payment of  premiums  thereon and  less  any  indebtedness  to  the  insurer  on the policy, including interest due or accrued.  (c) (1) A life insurance policy delivered or issued  for  delivery  in this  state may contain provisions excluding or restricting liability in the event of death as a result of:  (A) war or an act of war, if the  cause  of  death  occurs  while  the insured  is  serving  in  any armed forces or attached civilian unit and death occurs no later than six months  after  the  termination  of  such service;  (B)  the  special  hazards  incident to service in any armed forces or attached civilian unit, if the cause of death occurs during  the  period of such service while the insured is outside the home area, and if death occurs  outside  the  home area or within six months after the insured's return to the home area while in such service or within six months after the termination of such service, whichever is earlier;  (C) war or an act of war, within two years from the date of  issue  of the  policy,  if  the cause of death occurs while the insured is outside the home area but is  not  serving  in  any  armed  forces  or  attached civilian  unit,  and  death  occurs  outside the home area or within six months after the insured's return to the home area.  (2)  The  superintendent  may,  by  regulation,  prescribe  reasonable conditions  relating to the use of provisions permitted by paragraph one hereof. The provisions of subsection  (b)  hereof  shall  apply  to  any policy containing any provision permitted by this subsection.  (3) As used in this subsection, the term:  (A) "armed  forces"  means  the  military, naval, or air forces of any country, international organization, or combination of countries;  (B) "attached civilian  unit"  means  a  civilian  non-combatant  unit serving with any armed forces;  (C) "home  area"  means  the  fifty  states  of the United States, the District of Columbia, and Canada;  (D) "war"  includes  any  war  declared  or  undeclared,   and   armed aggression resisted by any armed forces;  (E) "act  of  war"  means  any act peculiar to military, naval, or air operations in time of war; and  (F) "special hazards incident  to  service",  includes  those  hazards resulting  in  the  insured's  death  being  presumed by reason of being missing, in action, or otherwise, or the insured's death from disease or injury, accidental or otherwise, to which a person serving in, or  with, any  armed  forces  or attached civilian units is exposed in the line of duty.  (4) In permitting war exclusions, it is the  legislative  intent  that such  exclusions  are  not  to be construed or interpreted as exclusions because of the status of the insured as a member of any armed forces  or attached  civilian units, or because of the presence of the insured as a civilian in a combat area or area  adjacent  thereto.  Such  permissible exclusions  shall  be  construed  and  interpreted according to the fair import of their terms so as not to exclude deaths  due  to  diseases  or accidents  which  are  common  to  the  civilian  population and are not attributable to special hazards to which a person serving in such forces or units is exposed in the line of duty.  (5) Any such war exclusion shall terminate six months after the end of the war in which the insured was engaged or the war  which  the  insured was  likely  to  engage  in  at the time of application for this policy, after the discharge, release or separation of the  insured  from  active military  service, after the demobilization of the insured, or after the insured permanently leaves the war area, whichever occurs first. The end of war shall be determined by an order of the president  of  the  United States  or  by  federal law or shall be deemed to occur on the effective date of an agreement or declaration to end  all  hostilities  which  has been adopted or accepted by all armed forces involved therein, or in the absence  of  such  an  agreement  or  declaration  at  the end of ninety continuous days from the end of all hostilities.  (d) (1) Subsections  (b)  and  (c)  hereof  shall  not  apply  to  any provision  in  a  life  insurance  policy for additional benefits in the event of accidental death.  (2)  If  a  policy provides that the death benefit may be increased or other policy provisions changed upon the application of the policyholder and the production of evidence of  insurability,  the  policy  may  also provide that the two-year exclusions permitted under subparagraph (B) or (D)  of  paragraph  one  of subsection (b) hereof or subparagraph (C) of paragraph one of subsection (c) hereof shall run from the date of  issue of  the  policy except that it shall run from the effective date of each subsequent increase or change with respect  to  each  such  increase  or change.  (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 policyholder, 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 policyholder 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.  (f)  Any  of  the  provisions  of  this  section, or portions thereof, exclusive of paragraph eleven of subsection (a) of this section, that do not apply to a single premium, nonparticipating, or term  policy,  shall to  that  extent  not be incorporated in such policy. This section shall not apply to group life insurance.