NCOIL Life Insurance and Financial Planning Committee Reverses Prior Approval of Disclosure Trigger for Loan Requests; Consumer Disclosure Model Act Nearing Finalization
Sep 25, 2010
In continuing discussion on “The Life Insurance Consumer Disclosure Model Act (‘Model Act’),” via teleconference on September 24, 2010, the National Conference of Insurance Legislators (“NCOIL”) Life Insurance and Financial Planning Committee (the “Committee”) reversed its prior approval of an insured seeking a loan under a life insurance policy as a triggering event requiring disclosure.
Sponsored by Kentucky State Representative Ron Crimm, the Model would require insureds who are 60 years of age or older, and who are known by insurers to be chronically or terminally ill, to be told about life insurance settlements and other options if they are planning to request an accelerated death benefit. As drafted, the Model Act would require life insurers to disclose all settlement options as an alternative to surrendering the policy or allowing it to lapse.
Extensive debate took place regarding insurance agents’ disclosure ability. Industry members stated that any restraints placed on agents are contractual between the insurer and the agent on the basis that an appointed life insurance agent may not be qualified to discuss such settlement options. In addition, some states require licensure to discuss options. However, the Model Act encourages policyholders to discuss their options with any financial advisor, agent or broker. The ability for policyholders to discuss their options with an attorney was added during the September 13 meeting.
After approving several technical changes to the Model Act, the Committee agreed to offer it once again for public comment, after which the Committee will resume its discussion of the proposed legislation at NCOIL’s 2010 Annual Meeting in Austin, Texas (November 18 through 21).
The September 24 conference call agenda and Model Act mark-up are attached for review.
To access various interested party comments on the Model Act submitted prior to the September 24 meeting, click here.
Should you have any comments or questions, please contact Colodny Fass.
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