2023 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.
(3) No participating dividend-paying paid-up deferred annuity contract
shall be delivered or  issued  for  delivery  in  this  state  unless  a
prospective  purchaser is provided with a disclosure statement, no later
than at the time of application, containing the following:
(A) a statement indicating that dividends are not guaranteed under the
participating dividend-paying paid-up deferred annuity contract and  the
income  is  therefore  not guaranteed to increase from the dollar amount
set at the time of issue; and
(B)  a  statement  indicating  that  the  initial   income   under   a
participating  dividend-paying  paid-up deferred annuity contract may be
lower than the initial income under a fully guaranteed paid-up  deferred
annuity contract.
(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.