§ 3230 — Accelerated payment of the death benefit or special surrender value under a life insurance policy

New York § 3230

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 32: Insurance Contracts - Life, Accident and Health, Annuities

Text

§ 3230. Accelerated payment of the death benefit or special surrender\nvalue under a life insurance policy. (a) The application for a life\ninsurance policy or policy rider which provides for accelerated payment\nof death benefits or a special surrender value shall:\n (1) contain a notice, prominently displayed, to read as follows:\n"Receipt of accelerated death benefits may affect eligibility for public\nassistance programs and may be taxable."; and\n (2) include the amount of any additional premium associated with the\naccelerated payment or, if there is no separately identifiable premium,\nwhether a discount is associated with acceleration.\n (b) The application to accelerate benefits shall:\n (1) be dated by the insurer upon transmittal and shall be completed\nand signed by the policy owner not more than thirty days thereafter; and\n (2) contain a notice, prominently displayed, to read as follows:\n"Receipt of accelerated death benefits may affect eligibility for public\nassistance programs such as medical assistance (medicaid), family\nassistance and supplemental security income. Receipt of accelerated\ndeath benefits in periodic payments may be treated differently than\nreceipt in a lump sum. Prior to applying for accelerated death benefits,\npolicyowners should consult with the appropriate social services agency\nconcerning how receipt will affect the eligibility of the recipient\nand/or the recipient's spouse or dependents."\n (3) contain a notice, prominently displayed, to read as follows:\n"Receipt of accelerated death benefits may be taxable. Receipt of\naccelerated death benefits in periodic payments may be treated\ndifferently than receipt in a lump sum. Prior to applying for such\nbenefits, policy owners should seek assistance from a qualified tax\nadviser."; and\n (4) contain a statement by the policy owner that such application is\nvoluntary and without coercion on the part of any third party; and\n (5) contain a statement of the remaining death benefit available to\nthe beneficiary.\n (c) Insurers are prohibited from paying accelerated death benefits or\nspecial surrender values to the policy owner or certificate holder for a\nperiod of five days from the date on which the information specified in\nsubdivision (d) of this section is transmitted in writing to the policy\nowner or certificate holder. The policy owner or certificate holder\nshall have the right to rescind the request for such payments at any\ntime during the process of application for said benefits.\n (d) Within five day of receipt of an application to accelerate\nbenefits an insurer must provide the policy owner with the following:\n (1) an illustration demonstrating the effect of the accelerated\nbenefit on the policy's cash value and policy loans;\n (2) a numerical computation of the amount of the death benefit which\nwould be payable upon death;\n (3) a numerical computation of the amount of the death benefit that\nwould be payable upon acceleration; and\n (4) a notice that other means may be available to achieve the intended\ngoal, including a policy loan.\n (e) A group life insurance policy which provides for accelerated\npayment of death benefits or a special surrender value must provide that\nonly the certificateholder has the right to accelerate the benefits.\n (f) This section shall apply to all life insurance policies or policy\nriders or provisions thereof that provide for accelerated payment of\ndeath benefits or a special surrender value pursuant to subparagraph\n(A), (B), (C), (D), (E) or (F) of paragraph one of subsection (a) of\nsection one thousand one hundred thirteen of this chapter.\n