House Bill #7124 (2018)
AN ACT RELATING TO INSURANCE - LIFE INSURANCE
Requires that the department of business regulation provide a mandatory disclosure notice, at no cost to insurers, to certain life insurance policy holders regarding their rights and alternatives to lapse or surrender.
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2018-01-11: Introduced, referred to House Corporations
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2018-01-19: Scheduled for hearing and/or consideration (01/23/2018)
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2018-01-23: Committee recommended measure be held for further study
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2018-05-18: Scheduled for consideration (05/23/2018)
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2018-05-23: Committee recommends passage
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2018-06-01: Placed on House Calendar (06/06/2018)
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2018-06-06: House read and passed
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2018-06-07: Referred to Senate Commerce
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2018-06-23: Scheduled for consideration (06/23/2018)
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2018-06-23: Committee recommends passage of Sub A
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2018-06-23: Placed on Senate Calendar (06/23/2018)
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2018-06-23: Senate passed Sub A
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2018-06-23: Placed on House Calendar (06/23/2018)
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2018-06-23: House passed Sub A in concurrence
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2018-06-27: Transmitted to Governor
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2018-07-02: Signed by Governor
Changes since original draft
2018 – H 7124- 2018 – H 7124 SUBSTITUTE A
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LC003499- LC003499/SUB A
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S T A T E O F R H O D E I S L A N D- S T A T E O F R H O D E I S L A N D
- IN GENERAL ASSEMBLY
- JANUARY SESSION, A.D. 2018
- ____________
- A N A C T
- RELATING TO INSURANCE - LIFE INSURANCE
- Introduced By: Representatives Kennedy, Casey, Keable, Johnston, and Marshall
- Date Introduced: January 11, 2018
- Referred To: House Corporations
- It is enacted by the General Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by adding thereto the following chapter:- SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by adding thereto the following chapter:
- CHAPTER 4.10
- MANDATORY DISCLOSURE OF ALTERNATIVES TO LAPSE OR SURRENDER
27-4.10-1. Definitions. (a) As used in this chapter, the term: (1) "Agent" means a person who is the agent of record of a policy or who has a business relationship with the policyholder or insured. (2) "Commissioner" means the director of the department of business regulation and any assistant to the director. (3) "Insured" means an individual who is covered by a policy. (4) "Insurer" means the insurance company that issued or currently insures the policy. (5) "Policy" means an individual life insurance policy owned by an individual who is a resident of this state, regardless of whether such policy has been issued, delivered, or renewed in this state. 27-4.10-2. Notice. (a) The commissioner shall develop, and adopt by rule, a written notice to inform a policyholder of alternatives to the lapse or surrender of a policy, and of the policyholder's rights, as an owner of the policy, which are related to the disposition of a policy. The notice must be developed at no cost to insurers, agents, or other licensees and must be written in lay terms.- 27-4.10-1. Definitions.
- (a) As used in this chapter, the term:
- (1) "Agent" means a person who is the agent of record of a policy or who has a business relationship with the policyholder or insured.
- (2) "Commissioner" means the director of the department of business regulation and any assistant to the director.
- (3) "Insured" means an individual who is covered by a policy.
- (4) "Insurer" means the insurance company that issued or currently insures the policy.
- (5) "Policy" means an individual life insurance policy owned by an individual who is a resident of this state, regardless of whether such policy has been issued, delivered, or renewed in this state.
- 27-4.10-2. Notice.
- (a) The commissioner shall develop, post on its website, a written notice to inform a policyholder of alternatives to the lapse or surrender of a policy, and of the policyholder's rights, as an owner of the policy, which are related to the disposition of a policy. The notice must be developed at no cost to insurers, agents, or other licensees and must be written in lay terms.
- (b) The written notice must contain all of the following:
- (1) A statement explaining that life insurance is a critical part of a broader financial plan.
- (2) A statement explaining that there are alternatives to the lapse or surrender of a policy.
- (3) A general description of the following alternatives to the lapse or surrender of a policy:
- (i) Accelerated death benefits available under the policy or as a rider to the policy;
- (ii) The assignment of the policy as a gift;
- (iii) The sale and assignment of the policy pursuant to a life settlement contract, including that a life settlement is a regulated transaction in this state pursuant to chapter 72 of title 27;
- (iv) The replacement of the policy;
- (v) The maintenance of the policy pursuant to the terms of the policy or a rider to the policy, or through a life settlement contract;
- (vi) The maintenance of the policy through loans issued by an insurer or a third party, using the policy or the cash surrender value of the policy as collateral for the loan;
- (vii) Conversion of the policy from a term policy to a permanent policy;
- (viii) Conversion of the policy in order to obtain long-term care health insurance coverage or a long-term care benefit plan; and
- (4) A statement explaining that life insurance, life settlements, or other alternatives to the lapse or surrender of the policy described in the notice may not be available to a particular policyholder depending on a number of circumstances, including the age and health status of the insured or the terms of a life insurance policy, and that the policyholder should contact their financial advisor, insurance agent, broker, or attorney to obtain further advice and assistance.
(c) An insurer, an agent, or an insurer and its agent must provide the written notice required to a policyholder if an insured under the policy is sixty (60) years of age or older or is known by the insurer or agent to be terminally ill or chronically ill, and: (1) If the policyholder requests the surrender, in whole or in part, of the policy; (2) If the policyholder requests an accelerated death benefit, nursing home benefit, critical illness benefit, or any other living benefit under the policy; (3) If the insurer sends a notice to the policyholder that the policy may lapse; provided, however, the insurer is not required to send such notice more than once within the twelve (12) month period after the date of the first notice of lapse of the policy; or (4) At any other time that the commission may prescribe by rule. (d) A violation of this section is deemed an unfair trade practice under chapter 13.1 of title 6. SECTION 2. This act shall take effect on October 1, 2018. ======== LC003499 ========- (c) An insurer, an agent, or an insurer and its agent must advise a policyholder with the annual benefit statement or otherwise that policy holders considering making changes in the status of the policy should consult a licensed insurance agent or financial advisor and that important information related to policy options, including information about an accelerated death benefit, nursing home benefit, critical illness benefit, and additional benefits may be found on the department of business regulation (DBR) website.
- SECTION 2. This act shall take effect on January 1, 2019.
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- LC003499/SUB A
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- EXPLANATION
- BY THE LEGISLATIVE COUNCIL
- OF
- A N A C T
- RELATING TO INSURANCE - LIFE INSURANCE
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- This act would require that the department of business regulation provide a mandatory disclosure notice, at no cost to insurers, to certain life insurance policy holders regarding their rights and alternatives to lapse or surrender.
This act would take effect on October 1, 2018. ======== LC003499 ========- This act would take effect on January 1, 2019. ======== LC003499/SUB A ========
Votes
NOTE: Electronic voting records are unofficial and may not be accurate. For an official vote tally, check the
House or Senate Journal from the day of the vote.
June 06, 2018 at 4:32pm
Yeas: 68 /
Nays: 0 /
Not voting: 7 /
Recused: 0
June 23, 2018 at 11:29pm
Yeas: 26 /
Nays: 0 /
Not voting: 11 /
Recused: 0
Floor vote for PASSAGE
IN CONCURRENCE
June 23, 2018 at 11:51pm
Yeas: 52 /
Nays: 0 /
Not voting: 23 /
Recused: 0