HF 3530

as introduced - 86th Legislature (2009 - 2010) Posted on 03/09/2010 10:11am

A bill for an act
relating to insurance; prohibiting annuity contracts from penalizing death as
forfeiture or surrender of the contract; amending Minnesota Statutes 2008,
section 61A.245, subdivision 3.

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

Section 1.

Minnesota Statutes 2008, section 61A.245, subdivision 3, is amended to
read:

Subd. 3.

Required contract provisions.

(a) In the case of contracts issued on or
after the operative date specified in subdivision 12, no contract of annuity, except as stated
in subdivision 2, shall be delivered or issued for delivery in this state unless it contains
in substance the following provisions, or corresponding provisions which in the opinion
of the commissioner are at least as favorable to the contract holder, upon cessation of
payment of considerations under the contract:

(1) that upon cessation of payment of considerations under a contract, or upon the
written request of the contract owner, the company shall grant a paid-up annuity benefit on
a plan stipulated in the contract of the value specified in subdivisions 5, 6, 7, 8 and 10;

(2) if a contract provides for a lump sum settlement at maturity, or at any other
time, that upon surrender of the contract at or prior to the commencement of any annuity
payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender
benefit of the amount specified in subdivisions 5, 6, 8 and 10. The company may reserve
the right to defer the payment of the cash surrender benefit for a period not to exceed
six months after demand therefor with surrender of the contract after making a written
request and receiving written approval of the commissioner. The request must address the
necessity and equitability to all contract holders of the deferral;

(3) a statement of the mortality table, if any, and interest rates used in calculating any
minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the
contract, together with sufficient information to determine the amounts of the benefits; and

(4) a statement that any paid-up annuity, cash surrender or death benefits that may
be available under the contract are not less than the minimum benefits required by any
statute of the state in which the contract is delivered and an explanation of the manner in
which the benefits are altered by the existence of any additional amounts credited by the
company to the contract, any indebtedness to the company on the contract or any prior
withdrawals from or partial surrenders of the contract.

(b) Notwithstanding the requirements of this subdivision, any deferred annuity
contract may provide that if no considerations have been received under a contract for
a period of two full years and the portion of the paid-up annuity benefit at maturity on
the plan stipulated in the contract arising from considerations paid prior to that period
would be less than $20 monthly, the company may at its option terminate the contract by
payment in cash of the then present value of the portion of the paid-up annuity benefit,
calculated on the basis of the mortality table, if any, and interest rate specified in the
contract for determining the paid-up annuity benefit, and by the payment shall be relieved
of any further obligation under the contract.

new text begin (c) Notwithstanding any other provision of this section, an individual deferred
annuity contract must provide that, upon notice to the company of the death of the contract
holder prior to the beginning of annuity payments, the company shall promptly pay to
the contract holder's beneficiaries the full value of the annuity contract as of the date of
death, plus interest on that amount from the date of death at a rate stated in the contract.
The contract must not treat death as a surrender of the annuity contract or otherwise
impose a forfeiture penalty.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2009,
and applies to annuity contracts issued on or after that date.
new text end