New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter A - Life, Accident and Health Insurance › Part 40 - Group Annuity Contracts And Funding Agreements: Disclosure And Withdrawal Rules › Section 40.3 - Disclosure

Current through Register Vol. 46, No. 28, July 10, 2024
(a) An insurance
				  company issuing a contract to which this Part applies is required, prior to the
				  commitment by the contractholder to enter into the contract, to provide the
				  plan sponsor (or persons representing the plan sponsor in the discussions with
				  the insurance company) or, where no plan sponsor exists, the prospective
				  contractholder (or persons representing the prospective contractholder in
				  discussions with the insurance company), with a written statement and/or a
				  specimen copy of the contract which contains all of the disclosures described
				  in paragraphs (b)(1) through (13) of this section. If a specimen contract is
				  provided, then a statement shall be supplied specifying where in the contract
				  the disclosures referred to in paragraphs (b)(1), (3), (4), (5), (6), (9) and
				  (10) of this section may be found. However, a written statement must be used in
				  all situations with less than 50 eligible participants under each pension plan
				  or governmental plan. If the group contract or funding agreement is issued to a
				  trust participated in by two or more employers or employee organizations, then
				  the trustee shall be provided with sufficient copies of the written statement
				  for distribution to each participating employer or employee organization if
				  there are less than 50 eligible employees of the employer or members of the
				  employee organization.
(b) A
				  written statement and/or contract referred to in subdivision (a) of this
				  section shall contain the following information to the extent applicable:
(1) a statement indicating restrictions as to
				  the amounts (whether minimum or maximum), and the timing of the contributions
				  under the contract (as well as the grace period, if any, for any required
				  contribution), and the duration of the contributions to be made to the
				  insurance company under the contract, including, if applicable, a description
				  of any charges or market value adjustments including liquidated damages which
				  may become applicable, or a statement that the contract may be terminated or
				  discontinued, in the event such contributions are not made in the amounts or on
				  the dates specified;
(2) a
				  description of the rights of the parties to a contract to cause the payment of
				  contributions under the contract to be discontinued, including, if applicable,
				  a description of any charges or market value adjustments including liquidated
				  damages, or damages on termination or discontinuance of the contract which may
				  result in the event the payment of contributions under the contract is
				  discontinued or, if such charges or adjustments are not fully determinable at
				  the commencement of the contract, a general description of the method to be
				  used by the insurance company in determining such charges or
				  adjustments;
(3) a statement of all
				  current fees and charges that are or may be assessed directly to the
				  contractholder or directly deducted by the insurance company from the
				  accumulation fund including a description of the extent and frequency to which
				  such fees and charges may be modified by the insurance company, and the extent
				  to which such fees and charges may take precedence over any payments to be made
				  by the insurance company under the contract;
(4) a statement of the interest rates to be
				  credited by the insurance company to the accumulation fund, or if such interest
				  rates are not fully determinable at the commencement of the contract, a general
				  description of the method to be used by the insurance company in determining
				  such interest rates stating, if applicable, that such interest rates are
				  affected by the investment experience of the assets held in the insurance
				  company's general account, and that the determination of such interest rates is
				  subject to the insurance company's discretion together with a statement,
				  describing how any withdrawals, transfers or payments will affect the amount of
				  interest credited;
(5) a
				  description of any expense, interest and benefit guarantees provided by the
				  insurance company under the contract, including a description of the duration
				  of such guarantees, and, if applicable, a description of the insurance
				  company's right under the contract to modify or eliminate such guarantees,
				  including the right in section
				  40.4(e) 
				  of this Part to apply surrender charges or market value adjustments to
				  withdrawals used to pay plan benefits if there are plan amendments or changes
				  in the manner in which the plan is administered that adversely affect the
				  insurance company's rights or liabilities under the contract;
(6) a description of the rights which the
				  contractholder and/or participants have to withdraw all or a portion of the
				  accumulation fund (or to apply such withdrawn amounts to the purchase of
				  guaranteed benefits or to the payment of benefits), and the terms under which
				  such withdrawals or applications may be made including a description of any
				  charges, fees or market value adjustments, both plus or minus, applicable to or
				  occasioned by such withdrawals or applications, or if such charges, fees, or
				  adjustments are not fully determinable at the commencement of the contract, a
				  general description of the method to be used by the insurance company in
				  determining same or a statement which discloses that no withdrawals or payments
				  are permitted prior to the maturity of a guarantee or the happening of a
				  certain event or events. If a full withdrawal by the contractholder is or may
				  be paid by the insurance company in installments, the description must include:
(i) the duration of the installment period,
				  or if such duration is not fully determinable at the commencement of the
				  contract, a general description of the method to be used by the insurance
				  company in determining such duration;
(ii) the amount, or method to be used by the
				  insurance company in determining the amount of each installment payment and the
				  effect of each such payment on the investment income credited to the
				  accumulation fund;
(iii) the
				  interest rates to be credited by the insurance company to the accumulation fund
				  during the installment period, or if such interest rates are not fully
				  determinable at the commencement of the contract, a general description of the
				  method to be used by the insurance company in determining such interest rates;
				  and
(iv) a statement whether a
				  withdrawal to fund plan benefits is prohibited or restricted during the
				  installment payout period;
(7) a statement indicating any pro rata,
				  percentage or other limitations which may apply to benefit payments to be
				  purchased or provided under the contract when the plan is not funded entirely
				  under the contract;
(8) a statement
				  is applicable, that contractholder or participant initiated withdrawals of all
				  or a portion of the accumulation fund of the contract are to be made on a
				  "first-in, first-out" (FIFO) or "last-in, first-out" (LIFO) basis or other
				  applicable basis;
(9) a statement,
				  if applicable, that the contract may be amended or the insurance company's
				  contractual rights, if any, to unilaterally modify the terms of the contract
				  without the consent of the contractholder, including amendments necessary to
				  keep the contract in compliance with law;
(10) a statement, if applicable, indicating
				  that the payment and amount of dividends or experience rate credits, if any,
				  which may be payable by the insurance company under the contract, are subject
				  to the insurance company's discretion;
(11) a statement, if applicable, that the
				  duration of the assets supporting the contract's liabilities will affect the
				  timing of withdrawals under the contract and that general information
				  describing such assets and the amount of time it will take the contractholder
				  to withdraw funds from the contract because of such assets, so affecting the
				  timing of withdrawal rights, will be supplied by the insurance company upon the
				  contractholder's request;
(12) a
				  statement that the contractholder or plan sponsor (or the person who is
				  negotiating the acquisition of the contract) is solely responsible for
				  determining whether the contract is a suitable funding vehicle and should,
				  therefore, carefully read the terms of the contract and the disclosure
				  statement, if any, before entering into the contract; and
(13) a statement, if applicable, that the
				  insurance company does not have the responsibility to reconcile participants'
				  individual account balances with the accumulation fund balance where the
				  insurance company does not maintain individual account balances.