SB208 (2022) Detail

Relative to life insurance.


SB 208  - AS INTRODUCED

 

 

2022 SESSION

22-2933

11/05

 

SENATE BILL 208

 

AN ACT relative to life insurance.

 

SPONSORS: Sen. Cavanaugh, Dist 16; Sen. Bradley, Dist 3; Rep. Hunt, Ches. 11; Rep. Abel, Graf. 13

 

COMMITTEE: Commerce

 

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ANALYSIS

 

This bill repeals and reenacts RSA 408 relative to 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

22-2933

11/05

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty Two

 

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  RSA 408 is repealed and reenacted to read as follows: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

General Requirements

408:1  Power of Commissioner.  Notwithstanding any other provision of law, the commissioner shall have sole authority to regulate the issuance and sale of life insurance, annuities, and variable products thereof.  The commissioner may adopt rules as necessary to implement the provisions of this chapter.  The commissioner may promulgate rules relating to protecting against the exploitation of the elderly and in home solicitation for life insurance policies and annuity contracts.

408:2  Certificate of Authority.  No person may issue a life insurance policy or annuity contract without first obtaining a certificate of authority from the commissioner.  

408:3  Insurable Interest.  

I.  For the purpose of life insurance and annuities:

(a)  An individual has an unlimited insurable interest in his or her own life, body, and health, and may lawfully take out a policy of insurance on his or her own life, body, and health, and have the policy made payable to whomsoever he or she pleases, regardless of whether the beneficiary designated has an insurable interest.

(b)  A policyholder has an insurable interest in the life of an individual if such policyholder has a lawful and substantial interest in the continued life of the insured, as distinguished from an interest that would arise only from, or would be enhanced in value by, the death of the individual insured.

(c)  An organization which qualifies for a charitable deduction under the Internal Revenue Code has an insurable interest in the life of any person who consents in writing to the organization's ownership or purchase of that insurance.

(d)  A life insurance policy or annuity may be issued to a business entity as the owner and beneficiary on the life of a key employee or partner if there exists a reasonable and substantial expectation of pecuniary benefit or advantage, direct or indirect, in the continued life of the other person.

(e)  A trustee, sponsor, or custodian of assets held in any plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001 et seq., or in any other retirement or employee benefit plan has an insurable interest in the lives of its employees, former employees and retirees for the purpose of funding, in the aggregate, all or part of the entity’s cost for preretirement and postretirement medical, death, disability and pension benefits to its employees, former employees, retirees or their beneficiaries, as long as an insurance program used to finance these employee benefits includes former employees, retirees or a broad class of employees selected by objective standards related to service, or category of employment and that the proceeds created by that insurance program are used for the sole purpose of funding the corporation’s preretirement or postretirement benefit programs covering at least a broad class of employees.

(1)  Employers shall notify eligible employees of their proposed participation in the plan and the employees shall be given an opportunity to refuse to participate.  On a prospective basis, employers shall obtain written consent of each individual being insured.  Consent shall include an acknowledgment that the employer may maintain the life insurance coverage even after the insured individual’s employment has terminated and the employee may not revoke their consent.

(2)  An employer shall not retaliate in any manner against an employee or a retired employee for refusing to consent to be insured.

(3)  For non-key or non-managerial employees, the amount of coverage shall be reasonably related to the benefits provided to the employees.

(4)  With respect to employer provided pension and welfare benefit plans, the life insurance coverage purchased to finance the plans should only be allowed on the lives of those employees and retirees who, at the time their lives are first insured under the plan, would be eligible to participate in the plan.

II.  An insurable interest shall exist at the time the policy or contract is issued.  No policy or annuity can exist without an insurable interest.

III.  No life insurance policy or annuity contract may be issued unless the insured has consented in writing to the issuance of such policy.  The insured shall have the right to revoke their consent at any time, except for plans issued as described in subparagraph I(e).  

IV.  If the beneficiary, assignee, or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement, or injury of the individual insured, the individual insured, or his or her executor or administrator, as the case may be, may maintain an action to recover those benefits from the person so receiving them.

V.  Any device, scheme, or artifice designed to give the appearance of an insurable interest where there is no legitimate insurable interest violates this title and shall constitute insurance fraud.

408:4  Form Review.

I.  No policy, contract, certificate, document, or other form related to life insurance or annuities shall be issued or delivered to any person in this state until a copy thereof has been submitted to the commissioner for review to determine whether it is in compliance with Title XXXVII and rules adopted thereunder.

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

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

(b)  If it does not comply with the requirements of Title XXXVII or rules adopted thereunder.

III.  If the commissioner disapproves a form, it shall be unlawful thereafter for the insurer to issue the form or use it in connection with any policy, contract, or certificate.  The commissioner shall issue a notice of disapproval, specify the reasons for disapproval in the notice, and state that a hearing shall be granted in accordance with RSA 400-A:17 upon request in writing by the insurer.

408:5  Subsequent Withdrawal of Approval.  The commissioner may at any time, after a hearing noticed in accordance with RSA 400-A:18, withdraw approval of any such form that does not comply with the requirements of Title XXXVII or rules adopted thereunder.  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.

408:6  Third Party Proceeds from Death Benefits.  The lawful beneficiary of a life insurance policy or annuity contract death benefit shall be entitled to its proceeds and all other benefits against creditors and representatives of the insured person 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 inure to the creditors’ benefit from the proceeds of the policy.

408:7  Intent to Defraud.  If it appears that the life insurance policy or annuity contract 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.

408:8  Penalty.  Any person who violates any provision of this chapter or any rule adopted thereunder shall be subject to penalties as provided under RSA 400-A:15, III.

408:9  Retained Asset Accounts.  

I.  "Retained asset account" means any mechanism whereby the settlement of death benefits payable under a life insurance policy or annuity contract is accomplished pursuant to a disclosure document with the beneficiary, or the beneficiary’s legal representative, by the insurer, or an entity acting on behalf of the insurer, depositing the proceeds into an account with check or draft writing privileges pursuant to a disclosure document.

II.  An insurer may not transfer funds to a retained asset account unless the beneficiary or the beneficiary’s legal representative has elected to receive funds through a retained asset account after receiving written information describing the settlement options available under the policy or contract and any other option available to the beneficiary for the receipt of proceeds.  

III.  The insurer shall provide written disclosures to the beneficiary, or the beneficiary’s legal representative, of the death benefit that clearly provides the rights of the beneficiary and the obligations of the insurer before the retained asset account is selected.  Such disclosures shall include the following:

(a)  Payment of the full benefit amount is accomplished by delivery of the draft book or check book;

(b)  One draft or check may be written to access the entire amount, including interest, of the retained asset account at any time;

(c)  Whether other available settlement options are preserved until the entire balance is withdrawn or the balance drops below the insurer's minimum balance requirements;

(d)  A statement identifying the account as either a checking account or a draft account and an explanation of how the account works;

(e)  Information about the account services provided and contact information where the beneficiary may request and obtain more details about such services;

(f)  A description of services provided at no charge and which services involve a fee, if applicable;

(g)  The frequency of statements showing the current account balance, the interest credited, drafts or checks written, and any other account activity;

(h)  The minimum interest rate to be credited to the account and how the actual interest rate will be determined;

(i)  The interest earned on the account may be taxable;

(j)  Retained asset account funds held by insurance companies are not insured by the Federal Deposit Insurance Corporation but are guaranteed by the state guaranty association.  The beneficiary should be advised to contact the National Organization of Life and Health Insurance Guaranty Associations via the association's website to learn more about the coverage limitations to the account under a state guaranty association;

(k)  A description of the insurer's policy regarding retained asset accounts that become inactive;

(l)  The contact information, including Internet website address, a telephone number, and address, where the beneficiary may obtain additional information and answers to any questions;

(m)  The recommendation to consult a tax, investment, or other financial advisor regarding tax liability and investment options; and

(n)  A beneficiary for the account may be designated if no designation has previously been made.

IV.  The insurer shall deliver periodic statements to the beneficiary at least quarterly detailing the account balance and any transactions.

408:10  Change in Beneficiary.  Any change in beneficiary in a life insurance policy or annuity contract shall comply with RSA 471-C:7, VII.

408:11  Interest Payment on Claims for Death Benefits.  

I.  Any policy or contract containing a death benefit shall contain a provision for the payment of interest on the death benefit, as follows:

(a)  Interest shall accrue and be payable from the date of death.

(b)  Interest shall accrue at the rate or rates applicable to the policy for funds left on deposit or, if the company has not established a rate for funds left on deposit, at the Two Year Treasury Constant Maturity Rate as published by the Federal Reserve.  In determining the effective annual rate or rates, the company shall use the rate in effect on the date of death.

(c)  Interest shall accrue at the effective annual rate determined in subparagraph (b), plus additional interest at a rate of 10 percent annually, beginning with the date that is 31 calendar days from the latest of dates identified in subparagraph (1) or (2), to the date the claim is paid, where it is:

(1)  The date that due proof of death is received by the company; or

(2)  The date the company receives sufficient information to determine its liability, the extent of the liability, and the beneficiary legally entitled to the proceeds.

II.  The insurer has a duty to pay all claims in a timely manner.  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 or annuity contract death benefit to any beneficiary for a period longer than reasonably necessary to transmit such payment.

III.  In any case in which interest on the proceeds of, or payments under, any individual or group policy of life insurance or annuity contract death benefit becomes payable pursuant to paragraph I, the insurer shall notify each named beneficiary at the last known address, as evidenced by the business records of the insurer, 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.

408:12  Electronic Mail.  Any notice or document required by this chapter to be mailed may be transmitted to the recipient electronically in lieu of mail in accordance with RSA 420-Q:2.  

Life Insurance

408:13  General Policy Requirements for Life Insurance.  Every life insurance policy subject to this chapter shall comply with the following:

I.  Payment of premiums.  There shall be a provision relating to the time and place of payment of premiums.

II.  Grace period.  There shall be a provision that the policyholder is entitled to a grace period for the premium due, except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder has 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.  The commissioner may adopt rules to establish the length of the grace period.

III.  Entire contract.  There shall be a provision that the policy, together with a copy of the signed and completed application, shall constitute the entire contract between the parties.

IV.  Incontestability.  There shall be a provision that the policy shall be incontestable by the insurer after it has been in force for 2 years during the lifetime of the insured.  However, any increase in the amount of the policy’s death benefits subsequent to the policy issue date, which occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured’s insurability, shall be incontestable after the increase has been in force, during the lifetime of the insured, for 2 years from the date of issue of increase.  

V.  Misstatement.  If there is a misstatement of age or gender in the policy, the amount of the death benefit shall be that which would be purchased by the most recent mortality charge at the correct age or gender.  The commissioner may approve other methods which are deemed satisfactory.

VI.  Suicide.  If the policy includes a suicide exclusion, such exclusion shall not apply after the second anniversary of the effective date of the policy.

408:14  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” may include retired employees, former employees, and directors of a corporate employer.  A policy issued to insure the employees of a public body may provide that the term “employee” shall include elected or appointed officials.

(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 shall insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

II.  A policy issued to a creditor or its parent holding company 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 or all of any class or classes thereof.  The policy may provide that the term “debtors” shall include:

(1)  Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

(2)  The debtors of one or more subsidiary corporations; and

(3)  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 no part of the premium is to be derived from funds contributed by insured debtors specifically for their insurance shall insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  The amount of insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.

(d)  The insurance shall be payable to the policyholder.  Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment and any excess of the insurance shall be payable to the estate of the insured.

(e)  Notwithstanding the provisions of subparagraphs (a)-(d), insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a non-decreasing or level term plan.  Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan,

III.  A policy issued to a labor union or similar employee organization, which shall be deemed the policyholder, to insure members of such union or organization 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 organization, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union or organization, or both.

(b)  The premium for the policy shall be paid by the policyholder, either wholly from the union's or organization’s funds or partly from such funds and partly from funds contributed by the insured members specifically for the insurance.  A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

IV.  A policy issued to the trustees of a fund established by 2 or more employers in the same industry or by one or more labor unions or similar employee organizations, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the union(s) or organizations 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, former employees, and directors of a corporate employer.

(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.  A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

V.  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 no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

VI.  A policy issued to an association or trust of public employees formed for purposes other than obtaining insurance, 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.  A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.

(c)  As used herein, “public employees” means employees of the United States government, or of any state, county, municipality, or political subdivision, or instrumentality of any of them.

VII.(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 VI 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)  If the commissioner has approved a discretionary group, it shall be the responsibility of the insurer to verify that the group continues to meet the discretionary group requirements.

(c)  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.

(d)  The commissioner may, after a hearing held pursuant to RSA 400-A:17, withdraw approval of a discretionary group if the commissioner finds such a group no longer meets the requirement of this paragraph.

VIII.  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.

408:15  Group Standard Provisions.  No policy or certificate 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, that (a) provisions in paragraphs II-VIII inclusive shall not apply to policies issued to a creditor to insure debtors of such creditor or to policies issued to a credit union to insure members of such credit union; and (b) 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 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.

II.  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 living designated beneficiary as to all or any part of such sum at the death of the person insured, the insurer may, subject to any right reserved by the insurer in the policy and set forth in the certificate, pay at its option a part of such sum, not exceeding $2,000, 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.

III.  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 IV, V, VI, and VII following.

IV.  A provision that if the insurance, or any portion of it, on a person covered under the policy, or on the dependent of a person covered, 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 a right of conversion.  The right of conversion entitles such person to have an individual life insurance policy issued by the insurer, without evidence of insurability and without disability or other supplementary benefits.

(a)  Application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination.

(b)  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.

(c)  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.

(d)  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.  Subject to the same conditions set forth in subparagraphs (a)-(c), the conversion privilege shall be available:

(1)  To a surviving dependent, if any, at the death of the employee or member, with respect to the coverage under the group policy that terminates by reason of the death; and

(2)  To the dependent of the employee or member upon termination of coverage of the dependent, while the employee or member remains insured under the group policy, by reason of the dependent ceasing to be a qualified family member under the group policy.

(e)  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.

(f)  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.

V.  A portability option, including for term insurance, may be offered, in addition to and not in lieu of the conversion right, when coverage ceases because of termination of employment or of membership in the class or classes eligible for coverage under the group policy, provided the subsequent policy, certificate, and group meet all the requirements in this chapter.  The portability option, if offered, shall be made available to all employees or members, without evidence of insurability and regardless of the reason for the termination of employment or of membership in the class or classes eligible for coverage.  Portability may be provided through a group life portability trust, established and maintained in New Hampshire and solely for the purpose of making ported life insurance available to employees or members whose coverage would terminate under the group life policy, provided it meets the requirements of a discretionary group as provided under RSA 408:14, VII and is approved by the commissioner.

VI.  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, including the insured dependent of a covered person, 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 IV, 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, or

(b)  $10,000.

VII.  If an individual insured under a group life insurance policy hereafter delivered in this state becomes entitled under the terms of the policy to have an individual policy or ported coverage certificate of life insurance issued without evidence of insurability, subject to making an application and payment of the first premium within the period specified in the policy, and if the individual is not given notice of the existence of the right at least 15 days prior to the expiration date of the period, then in that event, the individual shall have an additional period within which to exercise the right, but nothing herein contained shall be construed to continue any insurance beyond the period provided in the policy.  This additional period shall expire 15 days after the individual is given notice, but in no event shall the additional period extend beyond 60 days after the expiration date of the period provided in the policy.  It shall be the responsibility of the insurer to notify the individual of the right to elect conversion coverage.  Written notice presented to the individual or mailed by the policyholder to the last known address of the individual or mailed by the insurer to the last known address of the individual as furnished by the policyholder shall constitute adequate notice for the purpose of this paragraph.

VIII.  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 or ported coverage certificate issued to him or her in accordance with paragraph IV, V, or VI, and before such coverage shall have become effective, the amount of life insurance which he or she would have been entitled to have issued to him or her 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.

IX.  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.

408:16  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.

408:17  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 last address 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 he or she 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 said 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 408:15, IV.

408:18  Prohibited Provisions.  No group life insurance policy or certificate shall contain any provision that reduces or denies any benefit otherwise payable because a pre-existing 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 pre-existing 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.

Annuities

408:19  General Contract Requirements for Annuities.  Every annuity contract subject to this chapter shall comply with the following:

I.  Payment of premiums.  There shall be a provision relating to the time and place of payment of premiums.

II.  Grace period.  There shall be a provision that the contract holder is entitled to a grace period for the premium due, except the first, during which grace period the death benefit coverage shall continue in force, unless the contract holder gives the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the contract.  The contract may provide that the contract holder shall be liable to the insurer for the payment of a pro rata premium for the time the contract was in force during such grace period.  The commissioner shall adopt rules to establish the length of the grace period.

III.  Entire contract.  There shall be a provision that the annuity contract, together with a copy of the signed and completed application, shall constitute the entire contract between the parties.

IV.  Incontestability.  A provision that the contract shall be incontestable by the insurer after it has been in force for 2 years during the lifetime of the insured.  However, any increase in the amount of the contract’s death benefits subsequent to the contract issue date, which occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured’s insurability, shall be incontestable after the increase has been in force, during the lifetime of the insured, for 2 years from the date of issue of increase.  

V.  Misstatement.  If there is a misstatement of age or gender in the contract, the amount of the death benefit shall be that which would be purchased by the most recent mortality charge at the correct age or gender.  The commissioner may approve other methods which are deemed satisfactory.

408:20  Group Annuities Defined.  No group annuity may be delivered or issued for delivery in this state to a group which does not meet the definition of group annuity as defined in rules.  The commissioner may promulgate rules defining groups for annuities.

Separate Accounts

408:21  Definitions.

I.  "Separate account" shall mean a segregated investment account maintained by an insurance company.

II.  "Variable products " shall mean 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 products shall not be deemed subject to RSA 421-B.

408:22  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.

408:23  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.

III.  Except with the approval of the commissioner and under such conditions as to investments and other matters as the commissioner may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for benefits guaranteed as to dollar amount and duration, and funds guaranteed as to principal amount or stated rate of interest, shall not be maintained in a separate account.

IV.  Unless otherwise approved by the commissioner, assets allocated to a separate 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 the separate account, provided that, unless otherwise approved by the commissioner, the portion, if any, of the assets of the separate account equal to the company’s reserve liability, with regard to the guaranteed benefits and funds referred to in paragraph III, shall be valued in accordance with the rules otherwise applicable to the company’s assets.

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

408:24  Insurance 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 insurance company, and the insurance company shall not be, or hold itself out to be, a trustee in respect to such amounts.  To the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities, with respect to the account, shall not be chargeable with liabilities arising out of any other business the insurance company may conduct.

408:25  Managing Business of Separate Account.  To the extent the insurance company deems it necessary to comply with any applicable federal or state laws, the insurance company, with respect to a separate account, including, without limitation, any separate account that 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 the business of the 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 the company, to manage the business of the account.

Variable Products

408:26  Qualification of Companies; Subsidiaries and Affiliates.  

I.  No company shall issue for delivery within this state variable products unless it is licensed to do so in this state.

II.  A variable product license will only be issued to a company licensed in this state to conduct life insurance and annuity business if the commissioner is satisfied that the life insurance company’s condition or method of operation in connection with the issuance of variable products 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 products.  The state of entry of an alien company shall be deemed its place of domicile for this purpose.

III.  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.

408:27  Certificate.  Upon licensure of any insurance company to issue variable products, a certificate shall be issued stating the name and the fact that the company has been licensed as a life insurance company authorized to issue variable products.  The certificate shall 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 products offered by the licensee.  Certified copies of this certificate shall be furnished to the licensee for a fee as specified in RSA 400-A:29.

408:28  Variable Product Provisions.  Any variable product issued or delivered in this state, and any certificate evidencing variable benefits issued pursuant to any such product 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 product 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.

408:29  Variable Products and Separate Accounts.  Any domestic life insurance company which issues variable products shall establish one or more separate accounts known as variable product accounts.  Variable product accounts shall comply with all the requirements of separate accounts, pursuant to RSA 408:21-25.

408:30  Limitations.  Investments and liabilities of a variable product account shall at all times be clearly identifiable and distinguishable from the other investments and liabilities of the company.  No investments of a variable product account shall be pledged or transferred as collateral for a loan.

408:31  Investments.  

I.  The assets of a variable product 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 product 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 product account shall be valued at their market value on the date of valuation or, if there is no readily available market, as provided under the terms of the contract or policy, or the rules or other written agreement applicable to such variable product account, provided that, unless otherwise approved by the commissioner, the portion, if any, of the assets of such variable product account equal to the company's reserve liability, with regard to the guaranteed benefits and funds referred to in RSA 408:32, shall be valued in accordance with the rules otherwise applicable to the company's assets.

408:32  Reserves.  Except with the approval of the commissioner and under such conditions as to investments and other matters as he or she may prescribe, 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 product account.  The reserve liability for variable products 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.

408:33  Deposit of Securities.  Any company organized under the laws of this state, which has been authorized by the commissioner to issue variable products, shall deposit all securities representing the assets of a segregated fund for a variable product 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.

408:34  Advertising.  

I.  Only a life insurance company licensed to issue variable products in this state may, in this state, by direct solicitation or through agents or producers, or by letter, circular, or advertising, sell, offer for sale, or invite offers for or inquiries about variable products and only if it is licensed to do so under the provisions of this chapter.

II.  No insurance company or producer authorized to issue variable products shall advertise publicly the fact of his or her license or use such fact or the license certificate in connection with any sale or effort to sell variable products, except by statement of the fact or by exhibiting the certificate or a certified copy thereof.

408:35  Prohibiting Sales.  If the commissioner is of the opinion that any variable product 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 product, the commissioner may prohibit the sale or advertisement of said variable product.

408:36  Qualification of Variable Products.  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 products relating thereto.  Any variable life insurance or annuity contract delivered or issued for delivery in this state shall comply with all respective requirements of this chapter.

408:37  False Statement.  

I.  Whoever violates any provisions of RSA 408:26-36, inclusive, or knowingly files with the commissioner, or furnishes to him or her 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.

II.  Any false or misleading statements or information furnished to the commissioner shall be evidence that any sales of such variable products made thereafter were made on false representation in a suit to recover damages on account of loss sustained through the purchase thereof.

2  New Hampshire Trust Code; Reference Change.  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] 408:6; or

3  Fraternal Benefit Societies; Reference Change.  Amend RSA 418:31, II to read as follows:

II.  Any person who acts in violation of this section shall, in addition to any penalties or forfeiture with the power of the commissioner, be subject to the provisions of RSA 402-J [and RSA 408:8].

4  Long-Term Care Insurance Act; Reference Changed.  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] 408:13.  In all other situations, this section shall apply to life insurance policies that accelerate benefits for long-term care.

5  Regulation of Small Loans, Title Loans, and Payday Loans; Reference Change.  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, II] 408:14 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.

6  Producer Licensing; Reference Change.  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.

7  Effective Date.  This act shall take effect January 1, 2023.

Links

SB208 at GenCourtMobile

Action Dates

Date Body Type
Jan. 18, 2022 Senate Hearing
Senate Floor Vote

Bill Text Revisions

SB208 Revision: 34269 Date: Dec. 14, 2021, 12:54 p.m.

Docket


Jan. 19, 2022: Committee Report: Ought to Pass; Vote 5-0; CC


Dec. 20, 2021: Hearing: 01/18/2022, Room 100, SH, 09:15 am; SC 50


Dec. 14, 2021: To Be Introduced 01/05/2022 and Referred to Commerce; SJ 1