HF 770

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/06/2023 03:59pm

A bill for an act
relating to insurance; modifying provisions governing life insurance; amending
Minnesota Statutes 2022, sections 61A.031; 61A.60, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 61A.031, is amended to read:

61A.031 SUICIDE PROVISIONS.

new text begin (a) new text end The sanity or insanity of a person shall not be a factor in determining whether a
person committed suicide within the terms of an individual or group life insurance policy
regulating the payment of benefits in the event of the insured's suicide. This section shall
not be construed to alter present law but is intended to clarify present law.

new text begin (b) A life insurance policy or certificate issued or delivered in this state may exclude or
restrict liability for any death benefit in the event the insured dies as a result of suicide
within one year from the date of the issue of the policy or certificate. Any exclusion or
restriction shall be clearly stated in the policy or certificate. Any life insurance policy or
certificate which contains any exclusion or restriction under this paragraph shall also provide
that in the event any death benefit is denied because the insured dies as a result of suicide
within one year from the date of issue of the policy, the insurer shall refund all premiums
paid for coverage providing the denied death benefit on the insured.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2024, and applies to policies
issued or after that date.
new text end

Sec. 2.

Minnesota Statutes 2022, section 61A.60, subdivision 3, is amended to read:

Subd. 3.

Definitions.

The following definitions must appear on the back of the notice
forms provided in subdivisions 1 and 2:

DEFINITIONS

PREMIUMS: Premiums are the payments you make in exchange for an insurance policy
or annuity contract. They are unlike deposits in a savings or investment program, because
if you drop the policy or contract, you might get back less than you paid in.

CASH SURRENDER VALUE: This is the amount of money you can get in cash if you
surrender your life insurance policy or annuity. If there is a policy loan, the cash surrender
value is the difference between the cash value printed in the policy and the loan value. Not
all policies have cash surrender values.

LAPSE: A life insurance policy may lapse when you do not pay the premiums within
the grace period. If you had a cash surrender value, the insurer might change your policy
to as much extended term insurance or paid-up insurance as the cash surrender value will
buy. Sometimes the policy lets the insurer borrow from the cash surrender value to pay the
premiums.

SURRENDER: You surrender a life insurance policy when you either let it lapse or tell
the company you want to drop it. Whenever a policy has a cash surrender value, you can
get it in cash if you return the policy to the company with a written request. Most insurers
will also let you exchange the cash value of the policy for paid-up or extended term insurance.

CONVERT TO PAID-UP INSURANCE: This means you use your cash surrender value
to change your insurance to a paid-up policy with the same insurer. The death benefit
generally will be lower than under the old policy, but you will not have to pay any more
premiums.

PLACE ON EXTENDED TERM: This means you use your cash surrender value to
change your insurance to term insurance with the same insurer. In this case, the net death
benefit will be the same as before. However, you will only be covered for a specified period
of time stated in the policy.

BORROW POLICY LOAN VALUES: If your life insurance policy has a cash surrender
value, you can almost always borrow all or part of it from the insurer. Interest will be charged
according to the terms of the policy, and if the loan with unpaid interest ever exceeds the
cash surrender value, your policy will be surrendered. If you die, the amount of the loan
and any unpaid interest due will be subtracted from the death benefits.

EVIDENCE OF INSURABILITY: This means proof that you are an acceptable risk.
You have to meet the insurer's standards regarding age, health, occupation, etc., to be eligible
for coverage.

INCONTESTABLE CLAUSE: This says that after two years, depending on the policy
or insurer, the life insurer will not resist a claim because you made a false or incomplete
statement when you applied for the policy. For the early years, though, if there are wrong
answers on the application and the insurer finds out about them, the insurer can deny a claim
as if the policy had never existed.

SUICIDE CLAUSE: This says that if you deleted text begin commit deleted text end new text begin complete new text end suicide after being insured
for less than deleted text begin two years deleted text end new text begin one year new text end , depending on the policy and insurer, your beneficiaries
will receive only a refund of the premiums that were paid.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2024, and applies to policies
issued on or after that date.
new text end