New York state has a new law that requires sellers of equity indexed annuities and life contracts to show whether and how the products handle stock dividend payments.
The new statute, Section 3209(b)(2)(C) of the New York Insurance Law, requires sellers of indexed products to provide dividend treatment disclosure whether the contracts are illustrated or not, officials report in a new batch of guidance.
The prospective purchaser must receive the dividend treatment disclosure by the time the prospect files an application.
The disclosure statement must show whether stock dividends are included in changes in the stock index, together with a description of how any dividends would affect stock index changes, officials write.
“The statement must provide the average dividend rate over the lesser of 10 years or the calculable life of the index,” officials write.
The guidance gives several examples of how an insurer could calculate and communicate the average dividend rate.