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304.12-035 Beneficiaries' Bill of Rights.
(1)
(2)
(3)
As used in this section, "retained asset account" means any mechanism
whereby the settlement of proceeds payable under a life insurance policy,
including but not limited to the payment of cash surrender value, is
accomplished by the insurer or an entity acting on behalf of the insurer
depositing the proceeds into an account where those proceeds are retained by
the insurer, pursuant to a supplementary contract not involving annuity
benefits.
(a) An insurer may not use a retained asset account as the mode of
settlement unless the insurer discloses the use of a retained asset
account to the beneficiary or the beneficiarys legal representative prior
to the transfer of life insurance proceeds to a retained asset account.
(b) A beneficiary shall be informed, prior to the distribution of any life
insurance proceeds, of his or her right to receive a lump-sum payment of
life insurance proceeds in the form of a bank check or other form of
immediate full payment of benefits.
(a) A complete listing and clear explanation of all life insurance proceeds
payment options available to the beneficiary shall accompany, in written
or electronic format, the use of a retained asset account. The complete
listing and clear explanation of life insurance proceeds payment options
shall accompany the disclosure required by subsection (2)(b) of this
section.
(b) Pursuant to paragraph (a) of this subsection, the use of a retained asset
account shall require the following to be included in the complete listing
and clear explanation disclosure:
1.
The recommendation to consult a tax, investment, or other financial
advisor regarding tax liability and investment options;
2.
The initial interest rate, the circumstances and time frames under
which interest rates may change, and any dividends and other gains
that may be paid or distributed to the account holder;
3.
The custodian of the funds or assets of the account;
4.
The coverage guaranteed by the Federal Deposit Insurance
Corporation (FDIC), if any, and the amount of the coverage;
5.
The limitations, if any, on the number or amount of withdrawals or
transfers of funds from the account, including any minimum or
maximum withdrawal amounts for payment of life insurance
proceeds;
6.
The delays, if any, that the account holder may encounter in
completing authorized transactions and the anticipated duration of
such delays;
7.
The services provided for a fee, including a list of the fees and the
method of their calculation;
8.
The nature and frequency of statements of account;
9.
The payment of some or all of the life insurance proceeds may be
by the delivery of checks, drafts, or other instruments to access the
(c)
(4)
(a)
available funds;
10. The entire life insurance proceeds are available to the account
holder by the use of one (1) check, draft, or other instrument;
11. The insurer or a related party may derive income, in addition to any
fees charged on the account, from the total gains received on the
investment of the balance of funds in the account;
12. The telephone number, address, and other contact information,
including a Web site address, to obtain additional information
regarding the account; and
13. The following statement, "FOR FURTHER INFORMATION,
PLEASE CONTACT YOUR STATE DEPARTMENT OF
INSURANCE."
The writings produced to satisfy the requirements of this subsection shall
be written in plain language and printed in bold in no smaller than a
twelve (12) point font.
Insurers shall, on at least an annual basis, report the following information
to the Department of Insurance:
1.
The number and dollar amount of retained asset accounts:
a.
In force at the beginning of the year;
b.
Issued or added during the year;
c.
Closed or withdrawn during the year;
d.
In force at the end of the year; and
e.
That are transferred annually pursuant to KRS Chapter 393;
2.
The dollar amount of investment earnings or interest credited to
retained asset accounts during the year;
3.
The dollar amount of fees and other charges assessed during the
year;
4.
A narrative description of how the retained asset accounts are
structured. The description shall include:
a.
All of the interest rates paid to retained asset account holders
during the reporting year, as well as the number of times
changes were made to interest rates during the reporting year;
b.
A list of all applicable fees charged by the reporting entity
directly or indirectly associated with the retained asset
accounts; and
c.
Whether the retained asset accounts were the default method
for satisfying life insurance claims;
5.
The number and dollar amount of retained asset accounts in force
at the end of the current year as compared to the prior year
segregated by the following ages of the outstanding retained asset
accounts:
a.
Zero (0) to twelve (12) months;
b.
Thirteen (13) to twenty-four (24) months;
c.
Twenty-five (25) to thirty-six (36) months;
(5)
(6)
(7)
d.
Thirty-seven (37) to forty-eight (48) months;
e.
Forty-nine (49) to sixty (60) months; and
f.
Greater than sixty (60) months;
6.
The identity of any entity or financial institution that administers
retained asset accounts on behalf of the insurer; and
7.
Any other information relating to retained asset accounts as
requested or required by the commissioner of the Department of
Insurance.
(b) All marketing materials, disclosure statements, and supplemental contract
forms utilized in connection with retained asset accounts shall be filed
with the Department of Insurance prior to their use. The commissioner
shall disapprove any materials, statements, or forms submitted under this
section that are inconsistent with subsection (3) of this section or are
otherwise untrue, unfair, deceptive, false, or misleading.
An insurer shall immediately return any remaining balance held in a retained
asset account to the beneficiary when the account becomes inactive. A
retained asset account shall become inactive for purposes of this subsection if
no funds are withdrawn from the account, or if no affirmative directive has been
provided to the insurer by the beneficiary, during any continuous three (3) year
period.
The commissioner may promulgate administrative regulations implementing
this section.
This section may be cited as the Beneficiaries' Bill of Rights.
Effective:June 8, 2011
History: Created 2011 Ky. Acts ch. 61, sec. 1, effective June 8, 2011.
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