Life Bureau Filing Guidance Note

Guidance Date: 12/09/2009

Guidance for Filings made to comply with Supplement No. 1 to Circular Letter 27 (2008)

The disclosure discussed in Supplement No. 1 to Circular Letter 27 (2008) must be added to new issues of annuity contracts, certificates and applications effective May 1, 2010.  For in-force contracts, the disclosure must be provided to the contract holder/certificate holder in a communication to such persons during calendar year 2010.  Effective May 1, 2010, for both new business and in-force contracts and certificates, insurers should also provide the disclosure to the beneficiary following the death of the holder, except that, in the event that the insurer lacks primary responsibility for maintaining beneficiary records, administration of payments, or distributions upon the death in favor of the beneficiary, the insurer should use its best efforts to cause the person or persons with such primary responsibility to provide such disclosure to the beneficiary.

Any revisions needed to address the concerns raised in the Supplement concerning default options must be made to both in-force and new issue contracts effective May 1, 2010.

Disclosure and default option revisions may be addressed in an endorsement for in-force contracts and certificates.  For new issues of annuity contracts, certificates and applications, insurers may use an endorsement or may submit new policy forms that include the disclosure and revisions.  All endorsements and revised policy forms must be submitted to the Life Bureau for approval.

If the exact text of the sample disclosure below is used, an insurer may use the prior approval procedure under Insurance Law §3201(b)(1) or prior approval with certification procedure set forth in Circular Letter No. 6 (2004) to file its revised policy forms or endorsements.  If different disclosure text is used, an insurer may not use the Circular Letter No. 6 (2004) process because the disclosure would need to be reviewed on a case-by-case basis.

Pursuant to Section 3 of the federal Defense of Marriage Act (“DOMA”), same-sex marriages currently are not recognized for purposes of federal law.  Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) are currently NOT available to a same-sex spouse.  Same-sex spouses who own or are considering the purchase of annuity products that provide benefits based upon status as a spouse should consult a tax advisor.   To the extent that an annuity contract or certificate accords to spouses other rights or benefits that are not affected by DOMA, same-sex spouses remain entitled to such rights or benefits to the same extent as any annuity holder’s spouse.

The Life Bureau is instituting an expedited approval process for all filings made solely to comply with Supplement No. 1 to Circular Letter No. 27 (2008).  If an insurer makes any other changes to the policy forms, then the insurer may not utilize the expedited approval process, and the filing will be processed on a non-priority basis.  Further, all filings must comply with the following procedural requirements:

  1. The “Re” or caption of the submission letter must comply with Circular Letter No. 8 (1999).  In addition, the “Re” or caption must identify the filing as a “Supplement No. 1 to CL 27 (2008) submission”.
  2. If an endorsement is being submitted, the submission letter must identify the previously approved policy forms with which the endorsement will be used by the form number and approval date.
  3. If revised policy forms are being submitted, the insurer must submit a highlighted copy of the new forms showing the changes or explain the changes in the submission letter.
  4. The filing must include a certification from an authorized officer of the insurer that the insurer has not made any other changes to the previously approved forms and that the insurer is only adding disclosure or revising default option language to comply with Supplement No. 1 to Circular Letter No. 27 (2008).

For questions about this guidance, please contact Peter Dumar, Chief Insurance Attorney, Life Bureau.