The National Conference of Insurance Legislators (NCOIL) wants life policyholders to be told about a variety of alternatives to letting a policy lapse – including life settlements.
Members of NCOIL, Troy, N.Y., decided at the group’s annual meeting in Austin, Texas, approved the Life Insurance Consumer Disclosure Model Act.
The model, based on an existing Kentucky law, would require that policyholders be told about 8 possible options for dealing with difficulties with paying for a life policy, including accelerated death benefits, conversion to long term care, and selling the policy benefits to a life settlement company.
A policyholder would have to be warned that not all options might be available, and the policyholder would be advised to contact a financial advisor, insurance agent, broker or attorney to get more information.
Kentucky state Rep. Robert Damron, D-Nicholasville, Ky., the NCOIL president, helped the sponsor, Kentucky state Rep. Ron Crimm, R-Louisville, Ky., get the model approved.
“It is imperative that policyholders understand that they have alternatives to merely lapsing or surrendering their policy,” Damron says in a statement about the model.
The American Council of Life Insurers (ACLI), Washington, opposes the model.
“The NCOIL model, which takes a one size fits all approach, will cause further confusion to consumers on what to do with their life insurance policies as we believe that consumers are better served when they can consult with a financial planner or agent,” the ACLI says in a statement.
In other NCOIL meeting news:
- NCOIL members agreed unanimously to approve a retained
asset account Beneficiaries Bill of Rights Act model. The model would require an insurer to make it clear that a beneficiary can get access to the death benefit in the form of a single check.
A company offering RAAs also would have to disclose information about the account interest rate, fees, limitations, access delays, and availability of Federal Deposit Insurance Corp. insurance.
An insurer would have to report to the state insurance regulator annually on the number of RAAs in use and the amount of assets in the RAAs, how long the accounts have existed, and RAAs transferred to state unclaimed property funds.
If a beneficiary went for 3 years without asking an insurer to keep money in an RAA, the insurer would have to return the RAA balance to the beneficiary.
- NCOIL members also approved a market conduct annual statement data collection model law that will let regulators set rules for collecting and sharing information, and it would let regulators share conduct statement data confidentially.