This bill has been amended

Bill S7196-2009

Prohibits accelerated payment of death benefits or special surrender value pursuant to a life insurance policy because of residency in a nursing home

Prohibits accelerated payment of death benefits or special surrender value pursuant to a life insurance policy because of residency in a nursing home for 3 months or more by the person whose life is insured.

Details

Actions

  • Jun 9, 2010: ADVANCED TO THIRD READING
  • Jun 8, 2010: 2ND REPORT CAL.
  • Jun 7, 2010: 1ST REPORT CAL.753
  • Mar 19, 2010: REFERRED TO INSURANCE

Votes

VOTE: COMMITTEE VOTE: - Insurance - Jun 7, 2010
Ayes (18): Breslin, Stachowski, Kruger, Diaz, Parker, Sampson, Thompson, Johnson C, Espada, Peralta, Seward, LaValle, Larkin, Alesi, Leibell, Golden, Young, McDonald

Memo

 BILL NUMBER:  S7196

TITLE OF BILL : An act to amend the insurance law, in relation to prohibiting accelerated payment of death benefits or a special surrender value pursuant to a life insurance policy upon residency in a nursing home for three months or more by the person whose life is insured

PURPOSE : The purpose of this bill is to expand the definition of the term "life insurance" so that it may include the coverage of persons and have payouts made to such persons at times other than death. Under this bill, a life insurer may be able to write life insurance products where the payment will be available upon such insured residing in a nursing home for three months.

SUMMARY OF PROVISIONS : Section 1: Amends Insurance Law section 1113(a)(1) to expand the definition of life insurance to include the coverage of persons who have been a resident of a nursing home for three months or more and to make such event an insurable event under a life insurance policy.

Section 2: Amends Insurance Law section 3201(c)(11) to add life insurance policies that have a trigger for payment of the benefit upon residing in a nursing home for three months or more as one of the types of policies that the Insurance Department must approve the policy form for before an insurer can begin to sell such a product to the general public.

Section 3: Amends Insurance Law section 3230(f) to add the payment of an accelerated payment of a death benefit or special surrender value upon the insured residing in a nursing home for over three months.

JUSTIFICATION : As the general population becomes older, more and more individuals are looking for affordable ways to pay for the financing of their nursing home care. While there are available policies that provide payment for long term home health care, more products should be authorized under New York Law so that consumers will have more types of insurance coverage available to meet their specific needs or the needs of their family.

This bill expands the definition of "life insurance" so that policies can be written in New York that provide financing for those who have been in nursing home care for at least three months. currently, 49 other states offer life insurers the ability to write this type of coverage in the United States, but not New York. This bill takes care of this discrepancy

LEGISLATIVE HISTORY : New Bill.

FISCAL IMPLICATIONS : None.

EFFECTIVE DATE : January 1, next succeeding the date upon which it is signed into law.

Text

STATE OF NEW YORK ________________________________________________________________________ 7196 IN SENATE March 19, 2010 ___________
Introduced by Sen. KLEIN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to prohibiting acceler- ated payment of death benefits or a special surrender value pursuant to a life insurance policy upon residency in a nursing home for three months or more by the person whose life is insured THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subsection (a) of section 1113 of the insur- ance law, as amended by chapter 130 of the laws of 2003, is amended to read as follows: (1) "Life Insurance," means every insurance upon the lives of human beings, and every insurance appertaining thereto, including the granting of endowment benefits, additional benefits in the event of death by accident, additional benefits to safeguard the contract from lapse, accelerated payments of part or all of the death benefit or a special surrender value upon (A) diagnosis of terminal illness defined as a life expectancy of twelve months or less, (B) diagnosis of a medical condi- tion requiring extraordinary medical care or treatment regardless of life expectancy, (C) certification by a licensed health care practition- er of any condition which requires continuous care for the remainder of the insured's life in an eligible facility or at home when the insured is chronically ill as defined by Section 7702(B) of the Internal Revenue Code and regulations thereunder, provided the accelerated payments qual- ify under Section 101(g)(3) of the Internal Revenue Code and all other applicable sections of federal law in order to maintain favorable tax treatment, [or] (D) certification by a licensed health care practitioner that the insured is chronically ill as defined by Section 7702 (B) of the Internal Revenue Code and regulations thereunder, provided the accelerated payments qualify under Section 101(g)(3) of the Internal Revenue Code and all other applicable sections of federal law in order to maintain favorable tax treatment and the insurer that issues such policy is a qualified long term care insurance carrier under Section 4980c of the Internal Revenue Code or provide a special surrender value,
upon total and permanent disability of the insured, and optional modes of settlement of proceeds, OR (E) THE INSURED'S HAVING BEEN A RESIDENT OF A NURSING HOME, AS DEFINED IN SECTION TWENTY-EIGHT HUNDRED ONE OF THE PUBLIC HEALTH LAW, FOR A PERIOD OF THREE MONTHS OR MORE. "Life insur- ance" also includes additional benefits to safeguard the contract against lapse in the event of unemployment of the insured or in the event the insured is a resident of a nursing home. Amounts paid the insurer for life insurance and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to section four thousand two hundred forty of this chapter. S 2. Subparagraph (A) of paragraph 11 of subsection (c) of section 3201 of the insurance law, as amended by chapter 537 of the laws of 2000, such paragraph as renumbered by chapter 389 of the laws of 2001, is amended to read as follows: (A) The superintendent shall not approve a life insurance policy which provides for accelerated payment of death benefits or special surrender values pursuant to subparagraph (B) [or subparagraph], (C) [or subpara- graph], (D) OR (E) of paragraph one of subsection (a) of section one thousand one hundred thirteen of this chapter unless it also provides for such accelerated payments or special surrender values pursuant to subparagraph (A) of paragraph one of subsection (a) of such section. S 3. Subsection (f) of section 3230 of the insurance law, as added by chapter 537 of the laws of 2000, is amended to read as follows: (f) This section shall apply to all life insurance policies or policy riders or provisions thereof that provide for accelerated payment of death benefits or a special surrender value pursuant to subparagraph (A), (B) [or], (C) OR (E) of paragraph one of subsection (a) of section one thousand one hundred thirteen of this chapter. S 4. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law.

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