The law created by the bill, which was introduced by Assemblymember Ash Kalra, D-San Jose, Calif., will apply to annuity contracts issued on or after Jan. 1, 2019, according to a legislative analysis posted by the California state Senate Rules Committee.
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California's new annuity cash surrender law will:
Make the date the request is received the effective date for the surrender.
Require an insurer to process a contract surrender request within 45 days.
- Make the return-of-money period 30 days, if the contract owner submits a surrender form within 14 days of asking for the surrender.
Let the insurer defer payment of cash surrender for up to six months.
The California Department of Insurance sponsored the bill. The Association of California Life and Health Insurers supported the version that Brown signed into law.
The California department sponsored the bill partly because of concerns that uncertainty about the effective date of an indexed annuity surrender, or market-value-adjusted annuity surrender, could lead to confusion about how much cash a contract holder would actually get from surrendering the contract, according to the state Senate Rules bill analysis.
The new law applies only in California, but insurance regulators in other states may look to California when developing or updating their own rules for contract surrenders.
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