WASHINGTON BUREAU — The National Conference of Insurance Legislators (NCOIL) is emphasizing disclosure provisions in the latest version of a retained asset account (RAA) model.
The amended proposed model would create a “Beneficiaries Bill of Rights Act” that would require insurers to make detailed disclosures both to account beneficiaries and to state regulators.
An earlier version, exposed in late August, would not have let insurers use an RAA as the default option for paying life insurance death benefits. Most life insurers that have RAA programs now use the RAA benefits payment method as the default option.
Another provision that was eliminated — after six conference calls, according to officials at NCOIL, Troy, N.Y. – was one dealing with consent. The exposure draft would have required an insurer to get written consent from the beneficiary, or, in the case of a group contract, the policy owner, before putting the policy death benefits in an RAA.
In the latest revision, any funds remaining in the account after 4 years would have to be returned to the beneficiary if there was no activity in the account and if the insurer had not received “an affirmative directive” to maintain the account from the beneficiary.
NCOIL officials say the latter change was made at the request of Birny Birnbaum, a consumer advocate and critic of RAAs.
The final draft was predominately crafted by the Louisiana Insurance Department. The Louisiana proposal consolidated the model’s initial language.
The NCOIL Life Insurance Committee will be trying to win passage of the revised model at NCOIL’s annual meeting in