N.Y. Insurance Law § 3215: Disability benefits in connection with life insurance and annuities

§ 3215. Disability benefits in connection with life insurance and

annuities. (a) No policy of life insurance or contract of deferred

annuity, which provides benefits by reason of the disability of the

insured, including waiver of premium, shall be delivered or issued for

delivery in this state unless it contains in substance the following

provisions or provisions which in the opinion of the superintendent are

more favorable to policyholders:

(1) That disability benefits be paid or allowed only in case of total

disability and defining total disability in either of the following

forms:

(A) Total disability is incapacity of the insured, resulting from

injury or disease, to engage in any occupation for remuneration or

profit. Such a policy shall be known and described as a "total

disability" policy or contract.

(B) Total disability, shall exist whenever the insured's average

monthly earned income for a period of four months next preceding has, as

a result of the insured's injury or disease, not exceeded one-fourth of

his former earned income averaged monthly for a period (next preceding

said four months) which shall be prescribed in the policy and shall be

not less than twelve months. Such a policy shall be known and described

as an "earned income disability" policy or contract.

(2) That disability benefits will be paid or allowed only in case such

total disability is also permanent as defined in either of the following

forms:

(A) If such policy is a total disability policy, as defined in

paragraph one hereof, a provision that total disability which has been

continuous for a period specified in the contract, and which shall be

not less than four months nor more than one year, shall be deemed to be

permanent only with respect to determining the commencement of

disability benefits.

(B) If such policy is an earned income disability policy, as defined

in paragraph one hereof, a provision that total disability shall be

deemed to continue as long as the insured's earned monthly income shall,

as a result of injury or disease, not exceed one-fourth of his average

monthly earned income as determined at the commencement of total

disability.

(3) That written notice of claim be given to the insurer during the

lifetime of the insured and during the period of total disability.

Failure to give such notice shall not invalidate or reduce any claim if

it shall be shown not to have been reasonably possible to give such

notice and that notice was given as soon as was reasonably possible.

(4) That there be reasonable requirements as to the time, method and

form of proof of disability and as to the continuance of disability,

including an examination of the insured by the insurer at reasonable

intervals. Failure to furnish proof of disability within the time

required shall not invalidate or reduce any claim if it was not

reasonably possible to give proof within such time, provided such proof

is furnished as soon as reasonably possible and in no event, except in

the absence of legal capacity, later than one year from the time proof

is otherwise required.

(5) That the contract of disability insurance shall be incontestable

after it shall have been in force, during the lifetime of the insured

and without the occurrence of total disability of the insured, for a

period of three years from date of issue, except for nonpayment of

premiums and except for the conditions of the contract relating to

military or naval service.

(b) Any provision in such policy or contract that total disability

resulting from any specified cause shall be excluded from coverage,

shall contain only the following exclusions:

(1) (A) a provision terminating disability coverage when the insured

becomes a member of the military, naval or air forces of any country at

war, declared or undeclared; or

(B) a provision terminating disability coverage when the insured

becomes a member of any auxiliary or civilian non-combatant unit serving

with the military, naval or air forces of any country at war, declared

or undeclared; or

(C) a provision excluding from coverage disability commencing within

five years from the date of issue of the policy as a result of an act of

war or any act incident thereto, whether such war be declared or

undeclared, provided such act takes place while the insured is outside

the geographical limits specified in the policy.

(2) A provision excluding from the coverage disability resulting from

aviation under conditions specified in the policy.

(3) A provision excluding from the coverage disability directly

resulting from injuries wilfully and intentionally self-inflicted.

(c) No policy or contract shall contain any provision set forth in

this subsection, unless it conforms substantially to the following:

(1) Any provision excluding from the coverage disability resulting

from disease or injury occurring before the date of issue of the policy

or contract, except provisions excluding from the coverage a specific

disease or injury by name or description, shall be applicable only to

such disability commencing not later than two years after date of issue.

(2) A provision for a reasonable adjustment of income disability

benefits if the aggregate monthly amount of such benefits payable to the

insured, under all contracts of insurance, exceeds a specified

percentage not to exceed one hundred percent of the average monthly

earned income of the insured as may be ascertained in any reasonable

manner.

(d) No such policy shall provide that the face amount of life

insurance shall be reduced because of any disability benefits paid,

except that such policy may provide, in lieu of income payments, an

annuity certain for a period of not more than ten years, the value of

which at its inception shall be equal to the face amount of insurance,

with the provision that upon recovery such annuity shall cease and the

insurance shall be restored at a proportionate premium for an amount

equal to the present value of the instalments not yet due.

(e) No such policy which provides income disability benefits shall

contain any provision whereby the income disability benefits shall

exceed a monthly rate equal to one percent of the face amount of the

policy, such face amount not to include any additional benefits payable

in case of accidental death and of any pure endowment benefits.

(f) No such contract which provides income disability benefits shall

contain any provision whereby monthly income disability benefits exceed

one-twelfth of the annual annuity which would ordinarily be payable

thereunder at age seventy.

(g) The provisions of this section shall not apply to any group life

insurance policies or group annuity contracts.

(h) Within the meaning of this section:

(1) "waiver of premiums" includes refund of waived premiums, if paid;

(2) "income payments" means payments made monthly or at less frequent

regular intervals in addition to waiver of premiums and to all benefits

otherwise provided by the contract;

(3) "disability benefits" means waiver of premiums, or both waiver of

premium and income payments, whichever may be specified in the contract;

(4) "income disability benefits" means income payments contingent upon

total disability of the insured.