N.Y. Insurance Law § 3219: Annuity and pure endowment contracts and certain group annuity certificates; standard provisions as to contractual rights and responsibil...

§ 3219. Annuity and pure endowment contracts and certain group annuity

certificates; standard provisions as to contractual rights and

responsibilities of contract holders, certificate holders and insurers.

(a) Except as provided in section four thousand two hundred forty of

this chapter, every annuity or pure endowment contract except a group

annuity contract, and every group annuity certificate to which section

four thousand two hundred twenty-three of this chapter applies by reason

of subsection (b) thereof, or to which section four thousand two hundred

twenty-three of this chapter would apply if such certificate were not a

variable annuity, delivered or issued for delivery in this state, shall

contain in substance the following provisions, or provisions which the

superintendent deems to be more favorable to the holders of such

contracts or certificates:

(1) In any such contract or certificate requiring payments to be made

to the insurer, that, after the first payment, there shall be a grace

period of thirty-one days following the due date of any subsequent

payment within which the payment to the insurer may be made. During

such grace period, the contract or certificate shall continue in full

force. If a claim arises under the contract or certificate on account of

death during the grace period, the insurer may deduct from the death

benefit, or, in the case of a reversionary annuity, otherwise called a

survivorship annuity, may, at its option, reduce annuity payments to

take into account the portion of any unpaid payment applicable to the

period ending with the last day of the month in which such death

occurred;

(2) That, with respect to any statements, other than those relating to

age, sex, and identity, required as a condition of issuing the contract

or certificate, the contract or certificate shall be incontestable after

it has been in force during the lifetime of the person or of each of the

persons as to whom such statements are required, for a period of two

years from its date of issue, except where payments required by the

contract or certificate to be made to the insurer have not been made,

and except for violation of the conditions, if any, of the contract or

certificate relating to service in the armed forces; and at the option

of the insurer, such contract or certificate may also except provisions

relating to benefits for total and permanent disability and benefits for

accidental death;

(3) That the contract, together with the application therefor if a

copy of such application is attached to the contract when issued, shall

constitute the entire contract between the parties;

(4) That nothing in the group annuity contract invalidates or impairs

any right granted to the certificate holder by this section or the

certificate;

(5) That if the age or sex of the person or persons upon whose life or

lives the contract or certificate is made or of any of them has been

misstated, the amount payable or benefit accruing under the contract or

certificate shall be such as the payments to the insurer would have

purchased according to the correct age or sex; and that if the insurer

makes any underpayment or overpayment on account of any such

misstatement, the amount thereof, with interest at a rate to be

specified in the contract or certificate but not exceeding six per

centum per annum, shall be credited to, or charged against, the current

or next succeeding payment or payments to be made by the insurer under

the contract or certificate;

(6) That the insurer shall annually ascertain and apportion any

divisible surplus accruing on the contract;

(7) Specifying the options available upon cessation of payment of

considerations under a contract or certificate. Such options, except for

those under a reversionary annuity or pure endowment contract, shall be

in accordance with section four thousand two hundred twenty-three of

this chapter;

(8) In any such contract or certificate requiring payments to be made

to the insurer that at any time within three years from the date of

default in making payments to the insurer unless the cash surrender

value has been paid, the contract or certificate shall be reinstated if

the person entitled thereto pursuant to the provisions of the contract

or certificate

(A) applies to the insurer therefor,

(B) pays to the insurer all overdue payments and all indebtedness on

the contract or certificate with interest on such overdue payments at a

rate specified in the contract or certificate but not to exceed six per

cent per annum, compounded annually, and interest on any such

indebtedness at a rate or rates not exceeding the applicable loan rate

or rates determined in accordance with the contract's or certificate's

provisions, and

(C) where required by the insurer as a condition of reinstatement,

provides evidence of insurability including good health reasonably

satisfactory to the insurer;

(9) That upon surrender of the contract or certificate, together with

a written request for cancellation, to the insurer during a period of

not less than ten days nor more than thirty days from the date the

contract or certificate was delivered to the holder thereof, the insurer

refund either (i) any consideration paid for the contract or

certificate, including any fees or other charges or, if the contract or

certificate, or notice attached thereto, so provides, and the contract

or certificate is subject to the provisions of section four thousand two

hundred twenty-three of this chapter and provides for the determination

of any cash surrender benefits in accordance with a market-value

adjustment formula, (ii) the amount of the cash surrender benefits

provided under the contract or certificate plus the amount of all fees

and other charges deducted from gross considerations or imposed under

the contract or certificate. This provision shall appear in the contract

or certificate or in a notice attached to it; provided, however, that

the contract or certificate sold by mail order must contain a provision

permitting the contract or certificate holder a thirty day period for

such surrender.

(b) Any of the provisions of subsection (a) hereof or portions not

applicable to non-participating contracts or certificates or not

applicable to contracts or certificates for which a single payment to

the insurer is made shall, to that extent, not be incorporated in such

contract or certificate. Paragraphs one and eight of subsection (a) of

this section shall not apply to contracts or certificates that do not

require payments to be made to the insurer. An insurer shall issue a

certificate for delivery to a person covered under a group annuity

contract if such certificate, when issued, would be subject to

subsection (a) of this section.

(c) Annuity contracts subject to this section may permit an adjustable

maximum rate of interest on loans. Any such contract shall provide that

loans shall bear interest at a rate not in excess of an adjustable

maximum interest rate established from time to time by the insurer as

permitted by law, and shall specify the regular intervals at which the

interest rate is to be determined which shall be at least once every

twelve months, but not more frequently than once in any three month

period.

(d) This section shall not apply to contracts for deferred annuities

or reversionary annuities upon the lives of beneficiaries under life

insurance policies, nor, except to the extent expressly provided herein,

to group annuity contracts.