S. 2071-A(Seward)/A. 8343-A(Sweeney)
Equity Index Accounts; Annuities
Summary: The bill amends the standard nonforfeiture law for annuities to allow for
an alternative approach to determining minimum values for paid-up annuity, cash surrender, and death benefits in equity indexed annuity contracts. The bill also makes technical amendments to the nonforfeiture
law, and adds disclosure requirements to Insurance Law § 3209 for equity indexed annuity contracts. Specifically:
- Insurance Law § 4223(c) is amended to explicitly make the standard nonforfeiture
law for annuities applicable to each fixed account option available under a deferred annuity
contract; include language to reflect transfers among these accounts within the contract; and
codify the Insurance Department’s interpretation that death benefits are not surrenders subject
to surrender charges.
- A new basis for determining minimum values for paid-up annuity, cash surrender,
and death benefits in equity indexed annuity contracts is established.
- The withdrawal charge provision set forth in Insurance Law § 4223(e)(3)
is amended to require a 1% reduction in the withdrawal charge each year after the third year
reducing to zero after the tenth year.
- Insurance Law § 4223(f) is amended to clarify how the present value of any paid-up
annuity benefit available as a nonforfeiture option is calculated for contracts that do not provide
cash surrender benefits and contracts that do not provide any death benefits prior to the commencement
of annuity payments.
- Insurance Law § 4223(k)(1) is amended to require the annual report to identify
the minimum accumulation value, equity index value, and any changes in the participation rate,
margin, cap, floor, or other factor used in the equity index formula.
- Insurance Law § 3209(b) is amended to establish disclosure requirements for deferred
annuities with an equity index account.
Effective Date: The bill is effective ninety days after it becomes law, and authorizes
the Superintendent to promulgate rules and regulations necessary for implementation.
Last Action: Approved and signed by the Governor on July 7, 2008 (Chapter 170 of the
Laws of 2008).