NY Ins L § 3209 (2021)
2021 New York Laws ISC - Insurance Article 32 - Insurance Contracts - Life, Accident and Health, Annuities 3209 - Life Insurance, Annuities and Funding Agreements Disclosure Requirements.

§  3209.  Life  insurance, annuities and funding agreements disclosure requirements. (a) Except as hereafter exempted, this section shall apply to any solicitation,  negotiation  or  procurement  of  life  insurance, annuities  or  funding  agreements  occurring  within  this  state. This section shall apply to any issuer of life insurance or annuity contracts or funding agreements, including fraternal  benefit  societies  and  the life  insurance  department  of  a  savings  and  insurance bank. Unless otherwise specifically included, this section shall not apply to: credit life insurance; group life insurance; life insurance  policies,  annuity contracts,  and funding agreements issued in connection with pension and welfare plans as defined by and to the extent  covered  by  the  federal Employee  Retirement  Income  Security  Act  of  1974  (ERISA);  funding agreements issued to other than individuals pursuant to  subsection  (b) of  section  three  thousand two hundred twenty-two of this article; and any group  annuity  unless  at  least  one  certificate  is  subject  to paragraph  two  of  subsection  (b) of section four thousand two hundred twenty-three of this chapter.  (b) (1) No policy of life insurance shall be delivered or  issued  for delivery in this state after the applicable effective date, as set forth in  subsection (n) of this section, unless the prospective purchaser has been provided with the following:  (A) a copy of the  most  recent  buyer's  guide  and  the  preliminary information  required  by subsection (d) of this section, at or prior to the time an application is taken. When sales solicitations are  made  by mail,  without  the  involvement  of  an  agent  or broker, each initial solicitation must include a copy of the buyer's guide unless the  policy for  which  application is made provides for a period of at least thirty days  within  which  the  applicant  may  return  the  policy   for   an unconditional  refund  of  the premiums paid, in which event the buyer's guide must be delivered with the policy or  prior  to  delivery  of  the policy;  in  addition,  such  solicitation  must  alert  the prospective purchaser of the right to receive, upon request, a buyer's guide  and  a policy summary prior to delivery of the policy; and  (B) a policy summary upon delivery of the policy.  (2)  No  annuity contract or life insurance policy or certificate with an equity index account shall be delivered or  issued  for  delivery  in this  state  unless,  no  later  than  at  the  time of application, the prospective purchaser has been  provided  with  a  disclosure  statement containing the following:  (A)  a  statement  in  bold  type  to the effect that the equity index account provides benefits linked to an external equity  index  and  does not participate directly in the equity market;  (B)  a statement identifying the equity index used in the equity index formula, together with a description of any alternate index  should  the initial index no longer be publicly available;  (C)  a  statement  indicating  whether  paid dividends are included in changes in the equity index, together with a  description  of  how  such dividends,  or  lack  thereof,  would  affect  the changes in the equity index; the statement must provide the average  dividend  rate  over  the lesser of ten years or the calculable life of the index;  (D) a statement fully describing the equity index formula;  (E)  a  statement explaining and illustrating the equity index formula including any features of the equity index  formula  subject  to  change after issuance of the contract, policy or certificate;  (F)  a  statement  identifying the initial minimum guaranteed interest rate for the minimum accumulation value of an equity index  account  and any withdrawal charge;  (G)  a  statement  identifying  the  initial  current  and the minimum specified participation rate, i.e., how much  of  the  increase  in  the index  will  be  used  to calculate the indexed linked interest rate, if any;  (H)  a statement identifying the initial current and the minimum upper limit or cap on the indexed linked interest rate, if any;  (I) for a  life  insurance  policy  crediting  additional  amounts  in accordance  with  an  equity  index  less  frequently  than  annually, a statement to the effect  that:  if  the  policyholder  requests  a  full surrender  of  a  policy  prior  to  the  expiration of the equity index crediting period, 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  (J) other disclosure information the superintendent deems appropriate.  (c) Every insurer must provide, to any policyholder who so requests, a policy summary for each in-force  premium-paying  policy  for  which  no policy  summary  has  ever  been  furnished.  The insurer may charge the policyholder a reasonable fee for preparation of this  summary,  subject to guidelines specified in rules promulgated by the superintendent.  (d)  The  preliminary  information shall be in writing and include, to the extent applicable, the following:  (1) the name and address of the insurance agent or broker  or,  if  no agent or broker is involved, a statement of the procedure to be followed in  order  to  receive responses to inquiries concerning the preliminary information;  (2) the full name and home office, administrative office or branch  or agency  office  address  of the company in whose name the life insurance policy is to be written;  (3) the date of the preliminary information and the generic name,  the initial amount of insurance and the initial annual premium for the basic policy;  (4)  the  total guaranteed cash surrender values for the basic policy, at the end of the tenth and twentieth policy years or at the end of  the premium-paying  period  if  earlier.  These values may be shown on a per thousand or per unit basis;  (5) the effective policy loan annual percentage interest rate, if  the policy would contain this provision, and whether this rate is applied in advance or in arrears, adjustable or fixed;  (6)  for  the  life  insurance  policies described in paragraph one of subsection (n) of this section, life  insurance  cost  indexes  and  the equivalent level annual dividend for the basic policy for ten and twenty years, but in no case beyond the premium-paying period;  (7)  in addition, the applicant shall be advised that, when the policy is issued, a complete policy summary, including cost data, based on  the benefits,  premiums  and  dividends  of  the  policy  as issued, will be furnished; and that, following the receipt  of  the  policy  and  policy summary,  there  will be a period of not less than ten days within which the applicant may return the policy for an unconditional refund  of  the premiums paid; and  (8)  notwithstanding  the  foregoing,  no applicant for life insurance shall be prevented or delayed in effecting or applying for  coverage  by the  requirements  of  this  section.  In  such  cases  where  prior  to application it is impractical to provide any items  prescribed  by  this section,  such items may be estimated in good faith or furnished as soon thereafter as practical prior to delivery of policy.  (e) A policy summary shall include the following:  (1) a prominently placed title as follows:   "STATEMENT OF POLICY COST AND BENEFIT INFORMATION";  (2)  the  name and address of the insurance agent or broker, or, if no agent or broker is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary;  (3) the full name and home office, administrative office or branch  or agency  office  address  of the company in whose name the life insurance policy is to be or has been written;  (4) the generic name of the basic policy and each rider;  (5) for the life insurance policies  described  in  paragraph  one  of subsection (n) of this section, the following amounts, where applicable, for  the  first  five  policy  years  and  representative  policy  years thereafter sufficient to clearly  illustrate  the  premium  and  benefit patterns,  including the years for which life insurance cost indexes are displayed and  at  least  one  age  from  sixty  through  sixty-five  or maturity, whichever is earlier:  (A) the annual premium for the basic policy;  (B) the annual premium for each optional rider;  (C)  guaranteed  amount  payable  upon  death  at the beginning of the policy year regardless of the cause of  death,  other  than  suicide  or other specifically enumerated exclusions, which is provided by the basic policy  and  each optional rider, with benefits provided under the basic policy and each rider shown separately;  (D) total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider;  (E) cash dividends payable at the end of the year  with  values  shown separately  for  the  basic policy and each rider. Dividends need not be displayed beyond the twentieth policy year; and  (F) guaranteed endowment amounts payable under the  policy  which  are not included in guaranteed cash surrender values above;  (6)  the  effective policy loan annual percentage interest rate if the policy contains this provision, specifying whether this rate is  applied in  advance or in arrears. If the policy provides for an adjustable loan interest rate, the policy summary shall so state, shall  set  forth  the frequency  at  which  the  rate is to be determined for that policy, and shall describe the index upon which the maximum rate  is  based  at  the time the policy is issued;  (7)  for  the  life  insurance  policies described in paragraph one of subsection (n) of this section:  (A) life insurance cost indexes for ten and twenty  years  but  in  no case  beyond  the  premium-paying  period.  Separate  indexes  are to be displayed for the basic policy and for each optional term life insurance rider.  Such indexes need not be included for optional riders which  are limited to benefits such as accidental death benefits, disability waiver of premium, preliminary term life insurance coverage of less than twelve months  and  guaranteed insurability benefits, nor for basic policies or optional riders covering more than one life;  (B) the equivalent level annual dividend, in the case of participating policies and participating optional term life  insurance  riders,  under the  same  circumstances  and  for  the  same  durations  at  which life insurance cost indexes are displayed;  (8) a policy summary which includes dividends  shall  also  include  a statement  that  dividends  are  based on the company's current dividend scale and are not guaranteed; in addition, the summary  shall,  for  the life  insurance policies described in paragraph one of subsection (n) of this section, include a statement in close proximity to  the  equivalent  level annual dividend as follows: "An explanation of the intended use of the equivalent level annual dividend is included in the buyer's guide";  (9)  a statement in close proximity to the life insurance cost indexes as follows:   "AN EXPLANATION OF THE INTENDED USE OF THESE INDEXES  IS  PROVIDED  IN THE BUYER'S GUIDE"; and  (10) the date on which the policy summary is prepared.  (f)  The  policy  summary must be a separate document. All information required to be disclosed must be set out in such  a  manner  as  not  to minimize or render any portion thereof obscure. Any amounts which remain level for two or more years of the policy may be represented by a single number  if  it is clearly indicated what amounts are applicable for each policy year. Amounts in paragraph five of subsection (e) of this section shall be listed in total, not on a per thousand or per  unit  basis.  If more  than  one insured is covered under one policy or rider, guaranteed death benefits shall be displayed separately for  each  insured  or  for each class of insureds if death benefits do not differ within the class. Zero  amounts shall be displayed as zero and shall not be displayed as a blank space.  (g) Every insurer shall maintain, at  its  home  office  or  principal office,  a complete file containing one copy of each policy summary form authorized by the insurer for use pursuant to this section.  (h) An agent or broker shall inform a prospective purchaser, prior  to commencing  a  life insurance sales presentation, that he is acting as a life insurance agent or broker, and inform the prospective purchaser  of the  full  name  of  the  insurer  which  he  is  representing.  In sale situations in which an agent or broker  is  not  involved,  the  insurer shall identify its full name.  (i) As used in this section, "buyer's guide" means a separate document published  and  disseminated  by insurers. The language therein shall be promulgated by the superintendent, and shall, to the extent  practicable and  in  the  public  interest  as  determined by the superintendent, be consistent with the latest version of a buyer's guide as adopted by  the national association of insurance commissioners.  (j)  For life insurance policies, except term life insurance policies, which are to be issued  to  qualify  for  special  tax  treatment  under subsection  (b)  of  section  four hundred three of the Internal Revenue Code of 1986, as amended, a written notice shall  be  delivered  to  the proposed  insured  in  a manner satisfactory to the superintendent at or prior to the time an application is taken and  shall  read  as  follows: "The  purchase  of  a  life  insurance  policy  with  cash  value, which qualifies for special tax treatment under section 403(b) of the Internal Revenue Code of 1986, as amended, may not be appropriate for individuals seeking to maximize the accumulation of  funds  for  retirement  or  for individuals  seeking  life  insurance  coverage  primarily  to provide a survivorship benefit for the spouse in  the  event  of  death  prior  to retirement.   If   an   individual  needs  coverage  to  continue  after retirement,  current  tax  laws  require  the  commencement  of  taxable distributions  under  the tax sheltered annuity plan (TSA) no later than age seventy and one-half which may necessitate some  adjustment  in  the cash  value  life  insurance policy or may result in increased insurance costs in future policy years. You should consult with your  tax  advisor before  purchasing  life  insurance  with  cash  value  as part of a tax sheltered annuity (TSA)."  (k) The superintendent shall promulgate by regulation the contents and allowable format of the preliminary information and the  information  to appear  in  the policy summary. The superintendent shall also promulgate by regulation  standards  governing  the  content,  format  and  use  of  illustrations  of  individual  life insurance policies and certain group life  insurance  policies  and  certificates,  life  insurance  policies subject to section four thousand two hundred thirty-two of this chapter, variable life insurance policies under which the death benefits and cash values  vary in accordance with the unit values of investments held in a separate  account   and   individual   annuities,   individual   funding agreements,  variable  annuities,  and  group  annuity  contracts if any certificate is issued to  which  paragraph  two  of  subsection  (b)  of section  four thousand two hundred twenty-three of this chapter applies. The illustration regulation shall be consistent, to the greatest  extent practicable   and   in   the   public  interest  as  determined  by  the superintendent, with the illustration  regulations  as  adopted  by  the national  association  of insurance commissioners. The superintendent in developing  regulations  to  govern  the  content  and  format  of   the preliminary  information,  policy summary and illustrations shall ensure that such forms are presented in an easy, concise and meaningful way  to enable consumers to understand the operation of the policy or contract.  (l)  An  insurer  of  any  life  insurance  policy or annuity contract subject to this section shall  notify  the  superintendent  whether  its policies or contract forms have been or will be marketed with or without an  illustration.  For  those  policies  and  contracts marketed with an illustration which complies with the regulations promulgated pursuant to subsection (k) of this section, no  preliminary  information  or  policy summary  shall  be  required.  For those policies which are not marketed with an illustration, the preliminary  information  and  policy  summary shall be provided pursuant to the provisions of this section.  (m)   The   superintendent,   by   regulation,   shall  determine  the applicability of the illustration  regulation  promulgated  pursuant  to subsection  (k)  of  this  section  to group life insurance policies and group annuities and funding  agreements.  Such  determination  shall  be consistent,  to  the  greatest  extent  practicable  and  in  the public interest, with the illustration regulations as adopted by  the  national association of insurance commissioners.  (n) The effective dates of this section as applied to policies of life insurance,  annuity  contracts,  and  funding  agreements  shall  be  as follows:  (1)  for  individual  life  insurance  policies,  certain  group  life insurance  policies and certificates and life insurance policies subject to section four thousand two hundred thirty-two of this chapter, January first, nineteen hundred ninety-eight;  (2) for annuities and funding agreements, the date of promulgation  of regulations  by  the  superintendent  pursuant to subsection (k) of this section but not later than June thirty, nineteen hundred ninety-eight;  (3) for variable life insurance policies and variable  annuities,  the date  of promulgation of regulations by the superintendent but not later than January first, nineteen hundred ninety-nine.   No less than  three  months  prior  to  promulgating  the  regulations required  to  implement  subsection  (k)  of  this  section  pursuant to paragraphs two and three of this subsection,  the  superintendent  shall hold public hearings on such regulations.