SB664 (2020) Detail

Relative to life insurance.


SB 664  - AS INTRODUCED

 

 

2020 SESSION

20-2806

01/03

 

SENATE BILL 664

 

AN ACT relative to life insurance.

 

SPONSORS: Sen. Morgan, Dist 23; Sen. Gray, Dist 6; Rep. Bartlett, Merr. 19; Rep. Hunt, Ches. 11; Rep. McBeath, Rock. 26; Rep. Potucek, Rock. 6

 

COMMITTEE: Commerce

 

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ANALYSIS

 

This bill makes various changes in the law governing life insurance.

 

This bill is a request of the insurance department.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

20-2806

01/03

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty

 

AN ACT relative to life insurance.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Life Insurance.  RSA 408 is repealed and reenacted to read as follows:

CHAPTER 408

LIFE INSURANCE

408:1  Third Person.  If a policy of life or endowment insurance is effected by any person on his or her own life or on another life, in favor of a person other than the policyholder having an insurable interest therein, the lawful beneficiary thereof other than the policyholder or his or her legal representatives, shall be entitled to its proceeds and all other benefits against creditors and representatives of the person effecting the same; provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid in fraud of creditors, with interest thereon, shall enure to their benefit from the proceeds of the policy.

408:2  Charitable Gifts of Life Insurance.  

I.  A life insurance policy may be issued with the person paying the premiums for such insurance having no insurable interest in the life of the insured, providing a charitable, benevolent, educational, or religious institution or any other organization which qualifies for a charitable deduction under the Internal Revenue Code is designated irrevocably as the owner and beneficiary of the policy.

II.  A life insurance policy may be issued with the person paying the premiums designated in the application as owner and insuring the premium payer's own life and designating a charitable, benevolent, educational, or religious institution or any other organization which qualifies for a charitable deduction under the Internal Revenue Code as the irrevocable beneficiary of the policy.

III.  Nothing in this section shall affect the right of any person to effectuate life insurance on such person's own life, or by a person or any business entity on another life if there exists any reasonable expectation of pecuniary benefit or advantage, direct or indirect, in the continued life of the other person.

IV.  No life insurance policy may be issued under this section unless the insured has consented in writing to the issuance of such policy.

408:3  Subsequent Disapproval.  The commissioner may at any time, after a hearing of which not less than 20 days' written notice shall have been given to the insurer, withdraw his or her approval of any such form on any of the grounds stated in this chapter.  It shall be unlawful for the insurer to issue the form or use it in connection with any policy after the effective date of such withdrawal of approval.  The notice of any hearing called under this section shall specify the matters to be considered at the hearing and any decision affirming disapproval or directing withdrawal of approval under this chapter shall be in writing and shall specify the reasons for the disapproval.

408:4  Disapproval of Forms.

I.  No policy, contract, certificate, or other form shall be issued or delivered to any person in this state until a copy of the form thereof has been submitted to the commissioner for review under state law and such reasonable rules and regulations as the commissioner shall make concerning the provisions in such contracts and their submission for approval.

II.  The commissioner may, within 30 days after the filing of any such form, disapprove such form:

(a)  If it contains a provision which is unjust, unfair, inequitable, misleading, deceptive, or encourages misrepresentation of such policy; or

(b)  If it does not comply with the requirements of Title XXXVII.

III.  If the commissioner notifies the insurer which has filed any such form that it does not comply with the provisions of this chapter, it shall be unlawful thereafter for the insurer to issue the form or use it in connection with any policy, contract, or certificate.  In the notice, the commissioner shall specify the reasons for disapproval and state that a hearing shall be granted within 20 days after request in writing by the insurer.

408:5  Intent to Defraud.  If it appears that the policy was procured with the intent and effect of defrauding creditors of the person procuring the same, the party receiving the money secured by the policy shall be liable to such creditors for the amount of all premiums paid for such insurance with interest thereon.  The company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such payment the company shall have written notice, by or on behalf of a creditor, of a claim to recover for certain premiums paid in fraud of creditors with the certification of the amount claimed.

408:6  Policy Contract.  Every policy of insurance issued or delivered within this state by any life insurance corporation doing business within the state, together with the application therefor, a copy of which application shall be endorsed upon or attached to the policy and made a part thereof, shall constitute the entire contract between the parties.

408:7  Incontestability.  The policy shall be incontestable after it shall have been in force during the lifetime of the insured for 2 years from its date, except (a) for nonpayment of premiums, (b) for violations of the policy relating to naval or military service in time of war, and (c) at the option of the company, for provisions granting or increasing benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident; provided, however, that this section shall not apply to a policy issued by a life insurance corporation organized under the laws of this state if such policy is issued on the life of a person who is neither a resident nor a citizen of the United States of America, if such policy is delivered to the policyholder outside the continental limits of the United States of America and its territories, and if the laws and regulations of the nation in which the policy is delivered to the policyholder do not prohibit the delivery of a life insurance policy which contains no incontestability clause, so-called.

408:8  Interest Payment on Life Insurance Death Benefits.   

I.  Notwithstanding any other provision of law, any life insurance company doing business in this state which fails or refuses to pay the proceeds of, or payments under, any individual or group policy of life insurance issued by it within 30 days after the date of death of the insured shall pay interest, at a rate of interest currently paid by the insurer on proceeds left under the interest settlement option, computed from the date of the insured's death, on any moneys payable and unpaid after the expiration of such 30-day period.  This section shall apply only to deaths of insureds which occur on or after January 1, 1986.

II.  Nothing in this section shall be construed to allow any life insurance company doing business in this state to withhold payment of money payable under a life insurance policy to any beneficiary for a period longer than reasonably necessary to transmit such payment.  Whenever possible, payment shall be made within 30 days after the date of death of the insured.

III.  In any case in which interest on the proceeds of, or payments under, any individual or group policy of life insurance becomes payable pursuant to paragraph I, the insurer shall notify each named beneficiary at the last known address that interest will be paid on the proceeds of, or payments under, such policy from the date of death of the named insured if the company does not pay the proceeds of, or payments under, the policy within 30 days of the insured's death. Such notice shall specify the rate of interest to be paid.

IV.  This section shall not require the payment of interest in any case in which the beneficiary elects in writing delivered to the insurer to receive the proceeds of, or payments under, the policy by any means other than a lump sum payment.

408:9  Penalty.  Any person who violates any provision of this chapter or rule adopted pursuant to this chapter shall be subject to penalties as provided under RSA 400-A:15, III.

408:10  Group Life Insurance; Definitions.  No policy or certificate of group life insurance shall be issued or delivered in this state unless the policy is issued to a group that conforms to one of the following descriptions:

I.  A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

(a)  The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof determined by conditions pertaining to their employment.  The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietors, or partnerships if the business of the employer and of such affiliated corporations, proprietors, or partnerships is under common control through stock ownership, contract, or otherwise.  The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership.  The policy may provide that the term "employees" shall include retired employees.

(b)  The premium for the policy shall be paid by the policyholder, either from the employer's funds, or from funds contributed by the insured employees, or from both.  A policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the employer or trustees.

II.  A policy issued to a creditor or to the trustees of a fund established by one or more creditors, which creditor or trustees shall be deemed the policyholder, to insure debtors of the creditor or creditors, subject to the following requirements:

(a)  The debtors eligible for insurance under the policy shall be all the debtors of the creditor or creditors whose indebtedness is repayable in installments, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness.  The policy may provide that the term "debtors" shall include the debtors of one or more subsidiary corporations, and the debtors of one or more affiliated corporations, proprietors or partnerships if the business of the policyholder and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership, contract, or otherwise.

(b)  The premium for the policy shall be paid by the policyholder, either from the creditor or creditors' funds, or from charges collected from the insured debtors, or from both.  A policy on which part or all of the premium is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible for insurance, debtors under obligations outstanding at its date of issue without evidence of individual insurability unless at least 75 percent of the then eligible debtors of each creditor elect to pay the required charges.  A policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  The policy may be issued only if the group of eligible debtors of each creditor is then receiving new entrants at the rate of at least 100 persons yearly, or may reasonably be expected to receive at least 100 new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than 75 percent of the new entrants become insured.

(d)  The amount of insurance on the life of any debtor shall at no time exceed the amount owed and which is repayable in installments to the creditor.

(e)  The insurance shall be payable to the policyholder.  Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment.

III.  A policy issued to a labor union, which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives or agents, subject to the following requirements:

(a)  The members eligible for insurance under the policy shall be all of the members of the union, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union, or both.

(b)  The premium for the policy shall be paid by the policyholder, either wholly from the union's funds, or partly from such funds and partly from funds contributed by the insured members specifically for the insurance.  No policy may be issued on which the entire premium is to be derived from funds contributed by the insured members specifically for their insurance.  A policy on which part of the premium is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if at least 75 percent of the then eligible members, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions.  A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  The policy must cover at least 25 members at date of issue.

(d)  The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the union.

IV.  A policy issued to the trustees of a fund established by 2 or more employers in the same industry or by 2 or more labor unions, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:

(a)  The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the unions, or to both.  The policy may provide that the term "employees" shall include the individual proprietor or partners if an employer is an individual proprietor or a partnership.  The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.  The policy may provide that the term "employees" shall include retired employees.

(b)  The premiums for the policy shall be paid by the policyholder either wholly from funds contributed by the employers of the insured persons or partly from such funds and partly from funds contributed by the insured employees.

(c)  The policy must cover at least 100 persons at date of issue.

(d)  The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employers, or unions.

V.  A policy issued to any nonprofit industrial association (to be deemed the policyholder) in existence for a period of at least 10 years and organized for purposes other than obtaining insurance, subject to the following requirements:

(a)  If 2 or more members of the association, or any class or classes of members thereof determined by conditions pertaining to insurance, elect to insure their employees or any class or classes of employees determined by conditions pertaining to employment.

(b)  The total number of insured employees must not be less than 100.

(c)  The insurance premiums are paid by such members to the association; each member, insofar as applicable to his or her own employees, may collect part of the premium from insured employees; and the method of apportionment of the premium payment between himself or herself and his or her employees may be varied as among individual members.

(d)  Not less than 75 percent of the eligible employees of each participating member may be insured where the employees pay a part of the premium.  The word "Employees" as used in this subparagraph shall also include the individual members and employees of such association.

(e)  The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the members of the association.

VI.  A policy issued to a credit union or to the trustees of a fund established by one or more credit unions, which credit union or trustees shall be deemed the policyholder to insure members of such credit union or credit unions for the benefit of persons other than the credit union or credit unions or trustees or any of their officials, subject to the following requirements:

(a)  The members eligible for insurance shall be all of the members of the credit union or credit unions, or all of any class or classes thereof determined by conditions pertaining to membership in the credit union or credit unions.

(b)  The premium for the policy shall be paid by the policyholder, either wholly from the funds of the credit union or credit unions, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance, or wholly from funds contributed by the insured members specifically for their insurance.  A policy on which all or a part of the premium is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if at least 75 percent of the then eligible members of each credit union, excluding any as to whom evidence of insurability is not satisfactory to the insurer, elect to make the required contributions.  A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  The policy must cover at least 25 members at date of issue.

(d)  The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the credit union or credit unions.

VII.  A policy issued to an association of public employees formed for purposes other than obtaining insurance and having, when the policy is placed in force, a membership in the classes eligible for insurance of not less than 75 percent of the number of employees eligible for membership in such classes, which association shall be deemed the policyholder, to insure members of such association for the benefit of persons other than the association or any of its officials, subject to the following requirements:

(a)  The persons eligible for insurance under the policy shall be all of the members of the association, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the association, or both.

(b)  The premium for the policy shall be paid by the policyholder, either from the association's own funds, or charges collected from the insured members specifically for insurance, or from both.  No policy may be placed in force unless and until at least 75 percent of the then eligible members of the association, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, have elected to be covered.

(c)  The policy must cover at least 25 persons at date of issue.

(d)  The amounts of insurance under the policy must be based upon some plan precluding individual selection by the members.

(e)  In this paragraph, "public employees" means employees of the United States government, or of any state, county, municipality, or political subdivision or instrumentality of any of them.

VIII.(a)  A policy or certificate issued to a resident of this state under a group life insurance policy may be issued to a group other than one described in paragraphs I through VII provided the commissioner finds that:

(1)  The issuance or delivery of the policy or certificate is not contrary to the best interest of the public.

(2)  The issuance or delivery of the policy or certificate would result in economies of acquisition or administration.

(3)  The benefits are reasonable in relation to the premiums charged.

(4)  The premium for the policy shall be paid either from the policyholder's funds or from funds contributed by the covered persons, or from both, and shall insure all eligible covered persons, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(b)  Any filing made in relation to a discretionary group life insurance policy or certificate that was approved by the department prior to July 1, 2009 shall be deemed to meet the requirements of this paragraph, unless the commissioner acts at any time to revoke such approval after a hearing pursuant to RSA 400-A:17.

IX.  Notwithstanding the above, any such policy of group life insurance issued pursuant to paragraphs I-VII may be extended to provide group life insurance for an employee, or other member of the group, his or her spouse, child or children, or other dependents.

408:11  Group Standard Provisions.  No policy or certificates of group life insurance or any form attached to a policy or certificate of group life insurance shall be delivered or issued for delivery in this state to a resident of this state unless it contains in substance the following provisions, or provisions which in the opinion of the commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder, or certificate holder, provided, however, (a) that provisions in paragraphs VI-X inclusive shall not apply to policies issued to a creditor to insure debtors of such creditor, or policies issued to a credit union to insure members of such credit union; (b) that standard provisions which may be required for individual life insurance policies shall not apply to group life insurance policies; and (c) that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which in the opinion of the commissioner is or are equitable to the insured persons and to the policyholder or certificate holder, but nothing herein shall be construed to require that group life insurance policies and certificates contain the same nonforfeiture provisions as are required for individual life insurance policies:

I.  A provision that the policyholder is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy.  The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.

II.  A provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of 2 years during such person's lifetime nor unless it is contained in a written instrument signed by such person.

III.  A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his or her beneficiary.

IV.  A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his or her coverage.

V.  A provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used.

VI.  A provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary as to all or any part of such sum living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding $250 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.

VII.  A provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which he or she is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in paragraphs VIII, IX, and X following.

VIII.  A provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued to the person by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination, and provided further that:

(a)  The individual policy shall, at the option of such person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for;

(b)  The individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination, provided that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of such termination;

(c)  The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to the person's age attained on the effective date of the individual policy;

(d)  The suicide provision of the individual policy shall no longer apply after the second anniversary of the effective date of the group life insurance from which the conversion was made; and

(e)  The individual policy shall not be contestable after the second anniversary of the effective date of the group life insurance from which conversion was made.

IX.  A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least 5 years prior to such termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by paragraph VIII above, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of (a) the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of life insurance for which he or she is or becomes eligible under any group policy issued or reinstated by the same or another insurer within 31 days after such termination, and (b) $10,000.  Each insured person shall be given written notice of this conversion privilege and its duration within 15 days after the date of termination of the group contract or policy.  If this notice is given more than 15 days after the date of termination, the time allowed for the exercise of the privilege of conversion shall be extended for a period of 15 days following the date of the written notice.  Such notice shall be mailed by the insurer to the insured person at the last address furnished to the insurer by the policyholder.

X.  A provision that if a person insured under the group policy dies during the period within which he or she would have been entitled to have an individual policy issued to him or her in accordance with paragraph VIII or IX above and before such an individual policy shall have become effective, the amount of life insurance which he or she would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made.

XI.  Whenever any policy of group life insurance extends group life insurance to the spouse, child or children, or other dependents of an employee, or other member of the group, and if the coverage of any dependent of any employee or member of the group insured by such policy who is mentally or physically incapable of earning a living on the date as of which such dependent's status as a covered family member would otherwise expire because of age, shall continue under such policy while such policy remains in force or is replaced by another group policy as long as such incapacity continues and as long as the dependent remains chiefly financially dependent on the employee or member of the group or the employee or the employee's estate is chargeable for the care of the dependent, provided, that due proof of such incapacity is received by the insurer within 31 days of such expiration date.  If such coverage is continued in accordance with this paragraph, such dependent shall be entitled upon termination of such incapacity to a converted policy in accordance with and subject to the terms and conditions of the conversion privilege clause if such privilege is afforded by the policy, provided that such dependent has not attained the limiting age, if any, for conversion of adults specified in the policy.

408:12  Assignment of Interest.  Subject to the terms of the policies relating to assignment of incidents of ownership thereunder, a person whose life is insured under a group life insurance policy may assign any and all incidents of ownership granted him or her under such policy or by law, including but not limited to the right to designate a beneficiary, to exercise the conversion privilege, to have an individual policy issued to him or her and to pay premiums.  This provision shall be construed as declaring the law as it existed prior to its enactment and not as modifying it.

408:13  Continuation of Coverage During Labor Disputes.  Any employee whose compensation includes group life insurance, the premiums for which are paid in full or in part by an employer including the state of New Hampshire, its political subdivisions, or municipal corporations, or paid by payroll deduction, may pay the premiums as they become due directly to the policyholder whenever the employee's compensation is suspended or terminated directly or indirectly as the result of a strike, lockout, or other labor dispute for a period not exceeding 6 months and at the rate and coverages as the policy provides.

I.  During said 6-month period, the policy may not be altered or changed, except that nothing in this section shall be deemed to impair the right of the insurer to make normal decreases or increases of the premium rate upon expiration and renewal of the policy, in accordance with the provisions of the policy.

II.  When the employee's compensation is so suspended or terminated, the employee shall be notified immediately by the policyholder in writing, by mail addressed to the address last on record with the policyholder, that the employee may pay the premiums to the policyholder as they become due as provided in this section.

III.  The policyholder shall remit any premiums paid by the employees on a timely basis to the insurer.

IV.  Nothing herein shall be deemed to require the continuation of any such group coverage to any individual employee beyond the time that the employee takes full-time employment with another employer; nor shall anything herein be deemed to require continuation of the group coverage more than 6 months after compensation is suspended or terminated as the result of a labor dispute, nor to require the insurer to continue coverage as to any employee for whose coverage premiums have not been remitted in accordance with the provisions of the policy.

V.  After the 6-month period, if the group insurance coverage is no longer available, then the employee shall have the right to convert to an individual policy in accordance with the provisions of RSA 408:11, IX.

408:14  Prohibited Provisions.  No group life insurance policy or certificate shall contain any provision that reduces or denies any benefit otherwise payable because a preexisting medical or health condition contributed to the death or disability of the insured.  No group life insurance policy or certificate shall contain any provisions that exclude benefits for specified illnesses or medical conditions of the insured or which impose additional waiting periods for preexisting conditions or specified illnesses or medical conditions of the insured.  An insurer may require that an insured be actively at work in order to be eligible for any benefits of the policy or certificate.

408:15  Definition.  A "separate account" shall mean a segregated investment account maintained by an insurance company in accordance with RSA 408:16 to 408:19, inclusive.

408:16  Authorization.  A domestic life insurance company may establish one or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and benefits incidental thereto), payable in fixed or variable amounts or both.

408:17  Operation of Separate Accounts.  

I.  The income, gains, and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains or losses of the company.

II.  Notwithstanding any inconsistent provision in this chapter or in any section of the general statutes, the amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies and the investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.

408:18  Company Not a Trustee.  Amounts allocated by an insurance company to separate accounts in the exercise of the power granted by this chapter shall be owned by the company, and the company shall not be, or hold itself out to be, a trustee in respect to such amounts.

408:19  Definition.  A "variable contract" means any life insurance policy or annuity contract issued by an insurance company which provides that the dollar amount of benefits or other contractual payments thereunder may vary according to the investment experience of any separate account or accounts maintained by the insurance company in which amounts received in connection with such policies or contracts have been placed.  Variable contracts shall not be deemed subject to RSA 421-B.

408:20  Qualification of Companies; Subsidiaries and Affiliates.

I.  No company shall issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state.  In this connection, the commissioner shall consider among other things:

(a)  The history and financial condition of the company;

(b)  The character, responsibility and fitness of the officers and directors of the company; and

(c)  The law and regulation under which the company is authorized in the state of domicile to issue variable contracts.  The state of entry of an alien company shall be deemed its place of domicile for this purpose.

II.  If the company is a subsidiary of an admitted life insurance company, or affiliated with such company through common management or ownership, it may be deemed by the commissioner to have met the provisions of this section if either it or the parent or the affiliated company meets the requirements hereof.

408:21  Contract Provisions.  Any variable contract issued or delivered in this state and any certificate evidencing variable benefits issued pursuant to any such contract on a group basis shall contain a statement of the essential features of the procedure to be followed by the insurance company in determining the dollar amount of the variable benefits or other contractual payments or values thereunder and shall state in clear terms that such amount may decrease or increase according to such procedure.  Any such contract issued or delivered in this state and any such certificate shall contain on its first page, in a prominent position, a clear statement that the benefits or other contractual payments or values thereunder are on a variable basis.

408:22  Separate Accounts.  

I.  Any domestic life insurance corporation which issues variable contracts shall establish one or more separate accounts known as variable contract accounts.  Any amounts received by the company which are required by the variable contracts to be applied to provide variable benefits shall be added to the appropriate variable contract account, and the assets of any such variable contract account shall not be chargeable with liabilities arising out of any other business the company may conduct.  The company shall not, however, be a trustee with respect to such amounts.  If at any time there should be a deficit in any such variable contract account because of mortality experience, the company shall make additions to such an account, at least as often as annually, so that the assets of such account shall be sufficient to satisfy the company's mortality obligation for such variable benefits.  If at any time there should be a surplus in any such variable contract account because of mortality experience, the company may make withdrawals from such an account, not more frequently than annually, so that the assets of such account shall equal the amount required to satisfy the company's mortality obligation for such variable benefits.

II.  No sale, exchange, or other transfer of assets may be made by a company between any of its variable contract accounts or between any other investment account and one or more of its variable contract accounts unless, in case of a transfer into a variable contract account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the variable contract account to which the transfer is made, and unless such transfer, whether into or from a variable contract account, is made (a) by a transfer of cash, or (b) by a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the commissioner.  The commissioner may approve other transfers among such accounts if, in his opinion, such transfers would not be inequitable.

III.  To the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect to any variable contract account, including without limitation any variable contract account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of business of such account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account.

IV.  If and to the extent so provided under the applicable contracts, that portion of the assets of any such variable contract account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

408:23  Limitations.  Investments and liabilities of a variable contract account shall at all times be clearly identifiable and distinguishable from the other investments and liabilities of the corporation.  No investments of a variable contract account shall be pledged or transferred as collateral for a loan.

408:24  Investments.  

I.  The assets of a variable contract account may be invested in any real estate or tangible or intangible personal property which is a legal investment for a life insurance company, and in addition such assets may be invested wholly or partly in common stock, in preferred stocks or in other equities which are, at the time of their purchase, either listed or admitted to trading on a security exchange located in the United States of America or Canada, or are publicly traded on the over-the-counter market and as to which market quotations are available, provided that no more than 5 percent of the assets in any variable contract account may be invested in the securities of any one company and not more than 10 percent of any class of securities of any company shall be acquired.  

II.  Unless otherwise approved by the commissioner, assets allocated to a variable contract account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such variable contract account; provided, that unless otherwise approved by the commissioner, the portion if any of the assets of such variable contract account equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in RSA 408:25 shall be valued in accordance with the rules otherwise applicable to the company's assets.

408:25  Reserves.  Except with the approval of the commissioner and under such conditions as to investments and other matters as may be prescribed, which shall recognize the guaranteed nature of the benefits provided, reserves for (a) benefits guaranteed as to dollar amount and duration and (b) funds guaranteed as to principal amount or stated rate of interest shall not be maintained in a variable contract account.  The reserve liability for variable contracts shall be established by the insurance commissioner pursuant to the requirements of RSA 410, the Standard Valuation Law, in accordance with actuarial procedures that recognize the variable nature of the benefits provided.

408:26  Deposit of Securities.  Any corporation organized under the laws of this state which has been authorized by the commissioner to issue variable contracts shall deposit all securities representing the assets of a segregated fund for a variable contract account and all uninvested cash of such a fund with a custodian which shall be a bank or trust company, either within or without the state of New Hampshire, approved by the commissioner.

408:27  Registration Required.  Only a life insurance corporation licensed to do business in this state may, in this state, by direct solicitation or through agents or salesmen, or by letter, circular, or advertising sell, offer for sale, or invite offers for or inquiries about variable contracts and only if it is registered to do so under the provisions of this chapter.

408:28  Certificate.  Upon registration of any insurance corporation to issue variable contracts a certificate shall be issued stating the name and the fact that the registrant has been registered as a life insurance corporation authorized to issue variable contracts.  The certificate shall in other respects be in such form as the commissioner may determine, but shall state in bold type that the commissioner does not recommend and assumes no responsibility for, variable contracts offered by the registrant.  Certified copies of this certificate shall be furnished to the registrant at $5 each.

408:29  Prohibiting Sales.  If the commissioner is of the opinion that any such variable contract is of such a character that there is a serious financial danger to the purchaser in buying it, or that the circulars and advertisements do not disclose pertinent facts sufficient to enable intending purchasers to form a correct judgment of the nature and value of the variable contract, he or she may prohibit the registrant from selling or offering the said variable contracts, or in any way advertising the same.

408:30  Qualification of Variable Contracts.

I.  No registered insurance corporation or its producers or agents shall sell or offer for sale any form of variable contract unless the sale of such form of contract has been approved by the commissioner.  Such a corporation desiring to qualify such variable contract form shall submit to the commissioner such descriptive statistical, or documentary information as may be required.  The commissioner shall after examination of such information approve or disapprove the sale of such variable contract in the said form.  A fee in accordance with RSA 400-A:29 shall be charged for the examination of material submitted to obtain the qualification of a new variable contract form.

II.  Notwithstanding any other provision of law, the commissioner shall have sole authority to regulate the issuance and sale of variable contracts by a company, its agents and employees and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this chapter.

III.  Except for RSA 409:2 in the case of a variable life insurance policy and except as otherwise provided in this chapter, all pertinent provisions of Title XXXVII shall apply to separate accounts and contracts relating thereto.  Any individual variable life insurance contract, delivered or issued for delivery in this state, shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract.

408:31  Advertising Registration.  No insurance corporation authorized to issue variable contracts, agent or producers shall advertise publicly the fact of his or her registration, or use such fact or the registration certificate in connection with any sale or effort to sell variable contracts, except by statement of the fact or by exhibiting the certificate or a certified copy thereof.  

408:32  False Statement.  Whoever violates any provisions of RSA 408:20-31 inclusive, or knowingly files with the commissioner or furnishes to the commissioner any false or misleading statements or information, shall be guilty of a class B felony if a natural person, or guilty of a felony if any other person.  

408:33  Evidence.  Such false or misleading statements or information so furnished shall be evidence that any sales of such variable contracts made thereafter were made on false representation, in a suit to recover damages, on account of loss sustained through the purchase thereof.

2  Loans; Provisions Applicable to all Persons Under This Chapter.  Amend RSA 399-A:15, XII to read as follows:

XII.  Credit life insurance, credit accident and health insurance, and credit involuntary unemployment insurance may be issued in connection with a loan or other credit transaction authorized by this chapter in compliance with the provisions of RSA [408:15,] 408:10, II and the cost of such insurance and any commission, benefit, or return to the lender therefrom shall not be deemed a violation of any provision of this chapter; provided, however, that if there is more than one borrower or obligor on any such loan or credit transaction, credit life insurance providing a single benefit may cover both borrowers or obligors.  

3  Producer Licensing; Purpose and Scope.  Amend RSA 402-J:1, II to read as follows:

II.  This chapter applies to all persons required to be a licensed producer pursuant to the provisions of RSA 402:15; RSA 405:15; RSA 405:24; RSA 405:44-a; RSA 405:44-b; RSA 406-C:3; RSA 407-C:3; [RSA 408:42;] RSA 416-A:15; RSA 418:31; RSA 420-A:7; RSA 420-B:18; RSA 420-F:3; and New Hampshire code of administrative rules Ins 2501.03.  

4  Long-Term Care Insurance Act; Incontestability Period.  Amend RSA 415-D:9, VI to read as follows:

VI.  In the event of the death of the insured, this section shall not apply to the remaining death benefit of a life insurance policy that accelerates benefits for long-term care.  In this situation, the remaining death benefits under these policies shall be governed by RSA 408:[10]7.  In all other situations, this section shall apply to life insurance policies that accelerate benefits for long-term care.

5  Creditor's Claims; Spend thrift and Discretionary Trusts; Creditor's Claim Against a Settlor of a Revocable Trust.  Amend RSA 564-B:5-505(d)(1) to read as follows:

(1)  The proceeds and any other benefits of a policy of life or endowment insurance effected by a settlor, a trustee, or any other person on the settlor's life or another individual's life as provided in RSA 408:[2]1; or

6  Effective Date.  This act shall take effect January 1, 2021.

Links

SB664 at GenCourtMobile
SB664 Discussion

Action Dates

Date Body Type
Feb. 19, 2020 Senate Hearing
March 5, 2020 Senate Floor Vote

Bill Text Revisions

SB664 Revision: 7984 Date: Jan. 14, 2020, 2:42 p.m.

Docket

Date Status
Jan. 8, 2020 Introduced 01/08/2020 and Referred to Commerce; SJ 2
Feb. 19, 2020 Hearing: 02/19/2020, Room 103, SH, 02:30 pm; SC 7
March 5, 2020 Committee Report: Ought to Pass, 03/05/2020; Vote 5-0; CC; SC 9
March 5, 2020 Ought to Pass: MA, VV; OT3rdg; 03/05/2020; SJ 5
March 12, 2020 Introduced 03/12/2020 and referred to Commerce and Consumer Affairs HJ 8 P. 227
June 30, 2020 Vacated and Laid on Table MA VV 06/30/2020 HJ 10 P. 2
Died on Table