Sec. 38a-433. (Formerly Sec. 38-154a). Life insurance or annuities payable in
fixed or variable amounts. Accumulation of funds pursuant to funding agreements.
(a) A domestic life insurance company, including for the purposes of this section all
domestic fraternal benefit societies which operate on a legal reserve basis, may establish
one or more separate accounts and may allocate thereto amounts, including without
limitation proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance or life or period-certain annuities, and benefits incidental thereto, payable in fixed or variable amounts or both, or to accumulate funds
which are paid to or held by such company pursuant to section 38a-459, subject to the
following: (i) The income, gains and losses, realized or unrealized, from assets allocated
to a separate account shall be credited to or charged against the account, without regard
to other income, gains or losses of the company; (ii) except as may be provided with
respect to reserves for guaranteed benefits and funds referred to in subdivision (iii)
hereof, amounts allocated to any separate account and accumulations thereon may be
invested and reinvested in any class of loans and investments, and such loans and investments shall not be included in applying the limitations provided in sections 38a-102 to
38a-102h, inclusive; (iii) except with the approval of the commissioner and under such
conditions as to investments and other matters as he may prescribe, which shall recognize
the guaranteed nature of the benefits provided, reserves for (1) benefits guaranteed as
to dollar amount and duration and (2) funds guaranteed as to principal amount or stated
rate of interest shall not be maintained in a separate account; (iv) unless otherwise approved by the commissioner, assets allocated to a separate account shall be valued at
their market value on the date of valuation, or if there is no readily available market,
then as provided under the terms of the contract or the rules or other written agreement
applicable to such separate account, provided, that unless otherwise approved by the
commissioner, the portion, if any, of the assets of such separate account equal to the
company's reserve liability with regard to the guaranteed benefits and funds referred
to in subdivision (iii) hereof, shall be valued in accordance with the rules otherwise
applicable to the company's assets; (v) amounts allocated to a separate account in the
exercise of the power granted by this section shall be owned by the company, and the
company shall not be, nor hold itself out to be, a trustee with respect to such amounts.
If, and to the extent so provided under the applicable contracts, that portion of the assets
of any such separate account equal to the reserves and other contract liabilities with
respect to such account shall not be chargeable with liabilities arising out of any other
business the company may conduct; (vi) no sale, exchange or other transfer of assets
may be made by a company between any of its separate accounts or between any other
investment account and one or more of its separate accounts unless, in case of a transfer
into a separate account, such transfer is made solely to establish the account or to support
the operation of the contracts with respect to the separate account to which the transfer
is made, and unless such transfer, whether into or from a separate account, is made (1)
by a transfer of cash, or (2) by a transfer of securities having a readily determinable
market value, provided that such transfer of securities is approved by the commissioner.
The commissioner may approve other transfers among such accounts if, in his opinion,
such transfers would not be inequitable; (vii) to the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect
to any separate account, including without limitation any separate account which is a
management investment account or a unit investment trust, may provide for persons
having an interest therein appropriate voting and other rights and special procedures for
the conduct or the business of such account, including without limitation special rights
and procedures relating to investment policy, investment advisory services, selection
of independent public accountants, and the selection of a committee, the members of
which need not be otherwise affiliated with such company, to manage the business of
such account. The provisions of this subsection shall apply notwithstanding any inconsistent provision in the charter of any such domestic life insurance company or in the
general statutes.
(b) Any contract providing benefits payable in variable amounts delivered or issued
for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such
variable benefits. Any such contract under which the benefits vary to reflect investment
experience, including a group contract and any certificate in evidence of variable benefits
issued thereunder, shall state that such dollar amount will so vary and shall contain on
its first page a statement to the effect that the benefits thereunder are on a variable basis.
(c) Except to the extent permitted under section 38a-459, no domestic, foreign or
alien insurance company or fraternal benefit society shall deliver or issue for delivery
in this state any such contracts or annuities until the Insurance Commissioner licenses
it to do so. Such annuities or other contracts and the sale thereof, and such insurance
companies, shall be subject to the exclusive regulatory authority of the Insurance Commissioner and shall not be subject to The Connecticut Securities Act.
(d) Except for sections 38a-78 and 38a-440 in the case of a variable annuity contract
and section 38a-78 in the case of a variable life insurance policy and except as otherwise
provided herein, all pertinent provisions of sections 38a-61, 38a-77, 38a-78, 38a-81,
38a-82, 38a-284, 38a-287, 38a-430 to 38a-454, inclusive, and 38a-458 and, with respect
to fraternal benefit societies, sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800, shall apply to separate accounts and contracts relating
thereto. The reserve liability for variable contracts shall be established in accordance
with actuarial procedures that recognize the variable nature of the benefits provided and
any mortality guarantees.
(e) The commissioner shall have power to enforce the provisions of this section,
and may adopt, in accordance with the provisions of chapter 54, such regulations as he
deems necessary for that purpose, covering, but not limited to, the form of life insurance
or annuity contracts providing for benefits payable in fixed or variable amounts by
domestic life insurance companies or domestic fraternal benefit societies operating on
a legal reserve basis; separation of the assets of contract accounts; accounting of the
income, gains and losses of contract accounts; distribution of the proceeds of accounts;
sale, exchange or transfer of assets between accounts; guaranteed benefits; investment
and reinvestment of contract or account assets, loans or investments; reserve liabilities;
valuation of account assets; voting and other rights and special procedures affecting
accounts, including investment policy, advisory services and the management, generally, of accounts.
(1967, P.A. 529, S. 1; 1971, P.A. 509; P.A. 75-25, S. 1, 2; P.A. 77-614, S. 163, 610; P.A. 78-312, S. 7; P.A. 80-482,
S. 297, 348; P.A. 83-208, S. 2, 3; P.A. 93-239, S. 13; P.A. 96-227, S. 8.)
History: 1971 act rewrote provisions in greater detail, clearly distinguishing between insurance, annuities, etc. payable
in fixed amounts and those paid in variable amounts; P.A. 75-25 added Subsec. (e); P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department,
effective January 1, 1979; P.A. 78-312 expanded exception to limit applicability with respect to Secs. 38-130d and 38-130e in Subsec. (d); P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished
the department of business regulation; P.A. 83-208 amended Subsec. (a) to specifically provide that a domestic life insurance
company may provide life or period-certain annuities, or may accumulate funds pursuant to any funding agreement under
Sec. 38-33a; Sec. 38-154a transferred to Sec. 38a-433 in 1991; (Revisor's note: In 1993 obsolete references in Subsec. (d)
to repealed Secs. 38a-94 to 38a-101, inclusive, and 38a-966 to 38a-970, inclusive, were deleted editorially by the Revisors);
P.A. 93-239 made technical corrections for statutory consistency and substituted "sections 38a-102 to 38a-102h, inclusive"
for "section 38a-95"; P.A. 96-227 amended Subsec. (c) to replace "other insurance company" with "foreign or alien
insurance company or fraternal benefit society".
Sec. 38a-434. (Formerly Sec. 38-155). Insurance against accident and disease.
Any domestic insurance company empowered to make contracts contingent upon life
may issue policies or certificates insuring persons against loss of life or personal injury
resulting from any cause and against loss of time resulting from disease, which policies
or certificates shall state on their face the agreement with the persons receiving the same,
and, when executed in accordance with the charter and bylaws of such company, shall
be binding upon the company.
(1949 Rev., S. 6145.)
History: Sec. 38-155 transferred to Sec. 38a-434 in 1991.
Sec. 38a-435. (Formerly Sec. 38-147a). Regulations re replacement of or borrowing on life insurance products, policies or contracts. The Insurance Commissioner may make regulations governing the sale or offer of sale of life insurance products,
including annuities, when such sale or offer involves the replacement of existing policies
or contracts or the borrowing on or lapsing of such existing policies or contracts. Such
regulations may prescribe (a) the form in which such offer or proposal should be made;
(b) the form of notice to the insurance companies involved; (c) the questions to be
contained in application forms for life insurance products pertaining to existing insurance; and (d) the form of notice to the purchaser. The commissioner may suspend or
revoke the license of any insurance producer violating any such regulation.
(1963, P.A. 554; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 296, 348; P.A. 94-39, S. 3; P.A. 96-193, S. 12, 36.)
History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance
department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner
and division to prior independent status and abolished the department of business regulation; Sec. 38-147a transferred to
Sec. 38a-435 in 1991; P.A. 94-39 made references to life insurance products including annuities and added reference to
"life insurance contracts"; P.A. 96-193 substituted "producer" for "agent or broker", effective June 3, 1996.
Sec. 38a-436. (Formerly Sec. 38-157a). Notice of voidability of individual insurance contracts. Procedure. Time limit. Every individual life insurance policy delivered or issued for delivery to any person in this state shall have printed thereon or
attached thereto a notice stating, in substance, that the policy may be returned by the
applicant for cancellation by delivering or mailing the policy to the insurer or to the
insurance agent through whom it was effected, at any time within ten days after receipt
of the policy by the applicant, and that upon the delivery or mailing the policy shall be
void ab initio.
(P.A. 75-546; P.A. 90-243, S. 62.)
History: P.A. 90-243 made technical changes for statutory consistency; Sec. 38-157a transferred to Sec. 38a-436 in 1991.
Sec. 38a-437. (Formerly Sec. 38-158). Copy of application to be furnished. (a)
Each person within this state holding a policy of insurance issued by a life insurance
company doing business in this state shall be furnished by the company with a copy of
the application upon which the policy was issued, upon demand made for such copy by
the policyholder, or by any person upon whose life the policy was issued.
(b) If the company fails for thirty days from the time of the demand to furnish to
the person making the demand a copy of the application, the company shall be forever
barred from setting up, by way of defense to any suit on the policy of insurance, any
error, incorrectness, fraud or misrepresentation of that person, or any mistake therein;
and the application shall thereafter be taken and held, so far as the application may affect
any claim under the policy, or any fund secured thereby, to be in all respects true and
correct.
(1949 Rev., S. 6148; P.A. 90-243, S. 63.)
History: P.A. 90-243 divided the section into Subsecs. and made technical changes for statutory consistency; Sec. 38-158 transferred to Sec. 38a-437 in 1991.
Sec. 38a-438. (Formerly Sec. 38a-130b). Short title: Standard Nonforfeiture
Law. Sections 38a-438 to 38a-440, inclusive, shall be known as the "Standard Nonforfeiture Law".
(P.A. 78-312, S. 1 P.A. 91-175, S. 3.)
History: Sec. 38-130b transferred to Sec. 38a-438 in 1991; P.A. 91-175 deleted the reference to the Standard Valuation Law.
See Secs. 38a-77 and 38a-78 re Standard Valuation Law.
Sec. 38a-439. (Formerly Sec. 38-130c). Minimum nonforfeiture benefits for
life insurance policyholders who default in premium payments. Cash surrender
value. (a) In the case of policies issued on and after the effective date specified in
accordance with the provisions of subsection (g) of section 38-130c of the general statutes, revision of 1958, revised to 1981, no policy of life insurance, except as stated in
subsection (i) of this section, shall be delivered or issued for delivery in this state unless
it contains in substance the following provisions, or corresponding provisions which in
the opinion of the commissioner are at least as favorable to the defaulting or surrendering
policyholder as are the minimum requirements hereinafter specified and are substantially in compliance with subsection (h) of this section: (1) A statement that, in the
event of default in any premium payment, the company will grant, upon request by the
policyholder made in accordance with the policy not later than sixty days after the due
date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in
the policy, effective as of the due date, of such amount as may be hereinafter specified.
In lieu of the stipulated paid-up nonforfeiture benefit, the company may substitute, upon
request by the policyholder made in accordance with the policy not later than sixty days
after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death
benefits or, if applicable, a greater amount or earlier payment of endowment benefits;
(2) a statement that, upon surrender of the policy within sixty days after the due date of
any premium payment in default after premiums have been paid for at least three full
years in the case of ordinary insurance or five full years in the case of industrial insurance,
the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender
value of such amount as may be hereinafter specified; (3) a statement that a specified
paid-up nonforfeiture benefit shall become effective as specified in the policy unless
the person entitled to make such election elects another available option not later than
sixty days after the due date of the premium in default; (4) a statement that, if the policy
shall have become paid-up by completion of all premium payments or if it is continued
under any paid-up nonforfeiture benefit which became effective on or after the third
policy anniversary in the case of ordinary insurance or the fifth policy anniversary in
the case of industrial insurance, the company will pay, upon surrender of the policy
within thirty days after any policy anniversary, a cash surrender value of such amount
as may be hereinafter specified; (5) in the case of policies which, on a basis guaranteed
in the policy, provide for unscheduled changes in benefits or premiums, or which provide
an option for changes in benefits or premiums other than a change to a new policy, a
statement of the mortality table, interest rate, and method used in calculating the cash
surrender values and the paid-up nonforfeiture benefits available under the policy; in
the case of all other policies, a statement of the mortality table and interest rate used in
calculating the cash surrender values and the mortality table and interest rate used in
calculating the paid-up nonforfeiture benefits available under the policy, together with
a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if
any, available under the policy on each policy anniversary either during the first twenty
policy years or during the term of the policy, whichever is shorter, such values and
benefits to be calculated upon the assumption that there are no dividends or paid-up
additions credited to the policy and that there is no indebtedness to the company on the
policy; (6) a statement that the cash surrender values and the paid-up nonforfeiture
benefits available under the policy are not less than the minimum values and benefits
required by or pursuant to the insurance law of the state in which the policy is delivered;
an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the
policy or any indebtedness to the company on the policy; if a detailed statement of the
method of computation of the values and benefits shown in the policy is not stated
therein, a statement that such method of computation has been filed with the supervisory
official of the state in which the policy is delivered; and a statement of the method to be
used in calculating the cash surrender value and paid-up nonforfeiture benefit available
under the policy on any policy anniversary beyond the last anniversary for which such
values and benefits are consecutively shown in the policy. Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the
extent inapplicable, be omitted from the policy. The company shall reserve the right to
defer the payment of any cash surrender value for a period of six months after demand
therefor with surrender of the policy.
(b) Any cash surrender value available under the policy in the event of default in a
premium payment due on any policy anniversary, whether or not required by subsection
(a) of this section, shall be an amount not less than the excess, if any, of the present
value, on such anniversary, of the future guaranteed benefits which would have been
provided for by the policy, including any existing paid-up additions, if there had been
no default, over the sum of: (1) The then present value of the adjusted premiums as
defined in subsections (d) and (e) of this section, corresponding to premiums which
would have become due on and after such anniversary, and (2) the amount of any indebtedness to the company on the policy; provided that for any policy issued on or after the
compliance date established by subdivision (11) of subsection (e) of this section, which
provides supplemental life insurance or annuity benefits at the option of the insured and
for an identifiable additional premium by rider or supplemental policy provision, the
cash surrender value shall be an amount not less than the sum of such value for an
otherwise similar policy issued at the same age without such rider or supplemental policy
provision and for a policy which provides only the benefits otherwise provided by such
rider or supplemental policy provision; provided, further, that for any family policy
issued on or after the compliance date established by subdivision (11) of subsection (e)
of this section, which defines a primary insured and provides term insurance on the life
of the spouse of the primary insured expiring before the spouse attains the age of seventy-one, the cash surrender value shall be an amount not less than the sum of such value for
an otherwise similar policy issued at the same age without such term insurance on the
life of the spouse and for a policy which provides only the benefits otherwise provided
by such term insurance on the life of the spouse. Any cash surrender value available
within thirty days after any policy anniversary under any policy paid-up by completion of
all premium payments or any policy continued under any paid-up nonforfeiture benefit,
whether or not required by subsection (a) of this section, shall be an amount not less
than the present value, on such anniversary, of the future guaranteed benefits provided
for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of
default in a premium payment due on any policy anniversary shall be such that its present
value as of such anniversary shall be at least equal to the cash surrender value then
provided for by the policy or, if none is provided for, that cash surrender value which
would have been required by this section in the absence of the condition that premiums
shall have been paid for at least a specified period.
(d) (1) Except as provided in subdivision (3) of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform
percentage of the respective premiums specified in the policy for each policy year,
excluding any extra premiums charged because of impairments or special hazards, that
the present value, at the date of issue of the policy, of all such adjusted premiums shall
be equal to the sum of: (A) The then present value of the future guaranteed benefits
provided for by the policy; (B) two per cent of the amount of insurance, if the insurance
be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if
the amount of insurance varies with duration of the policy; (C) forty per cent of the
adjusted premium for the first policy year; (D) twenty-five per cent of either the adjusted
premium for the first policy year or the adjusted premium for a whole life policy of the
same uniform or equivalent uniform amount with uniform premiums for the whole of
life issued at the same age for the same amount of insurance, whichever is less. In
applying the percentages specified in subparagraphs (C) and (D) above, no adjusted
premium shall be deemed to exceed four per cent of the amount of insurance or uniform
amount equivalent thereto. The date of issue of a policy for the purpose of this subsection
shall be the date on which the rated age of the insured is determined; (2) in the case of
a policy providing an amount of insurance varying with duration of the policy, the
equivalent uniform amount thereof for the purpose of this subsection shall be deemed
to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for
the same term, the amount of which does not vary with duration and the benefits under
which have the same present value at the date of issue as the benefits under the policy,
provided in the case of a policy providing a varying amount of insurance issued on the
life of a child under age ten, the equivalent uniform amount may be computed as though
the amount of insurance provided by the policy prior to the attainment of age ten was
the amount provided by such policy at age ten; (3) the adjusted premiums for any policy
providing term insurance benefits by rider or supplemental policy provision shall be
equal to: (A) The adjusted premiums for an otherwise similar policy issued at the same
age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (B) the adjusted premiums for
such term insurance, the foregoing items (A) and (B) being calculated separately and
as specified in subdivisions (1) and (2) of this subsection except that, for the purposes
of subparagraphs (B), (C) and (D) of subdivision (1) of this subsection, the amount of
insurance or equivalent uniform amount of insurance used in the calculation of the
adjusted premiums referred to in subparagraph (B) of this subdivision shall be equal to
the excess of the corresponding amount determined for the entire policy over the amount
used in the calculation of the adjusted premiums in subparagraph (A) of this subdivision;
(4) in the case of ordinary policies, all adjusted premiums and present values referred
to in this section shall be calculated on the bases of the Commissioners' 1958 Standard
Ordinary Mortality Table and the rate of interest specified in the policy for calculating
cash surrender values and paid-up nonforfeiture benefits provided such rate of interest
shall not exceed five and one-half per cent per annum and provided, for any category
of ordinary insurance issued on female risks, adjusted premiums and present values may
be calculated according to an age not more than six years younger than the actual age
of the insured; provided in calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates
of mortality assumed may be not more than those shown in the Commissioners' 1958
Extended Term Insurance Table; and provided further, for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be
based on such other table of mortality as may be specified by the company and approved
by the commissioner; (5) in the case of industrial policies, all adjusted premiums and
present values referred to in this section shall be calculated on the basis of the Commissioners' 1961 Standard Industrial Mortality Table and the rate of interest specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits provided
such rate of interest shall not exceed five and one-half per cent per annum; provided,
in calculating the present value of any paid-up term insurance with accompanying pure
endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed
may be not more than those shown in the Commissioners' 1961 Industrial Extended
Term Insurance Table; and provided further, for insurance issued on a substandard basis,
the calculations of any such adjusted premiums and present values may be based on
such other table of mortality as may be specified by the company and approved by the
commissioner; and (6) the provisions of this subsection shall not apply to any policy
issued on or after the compliance date applicable to the issuing company as determined
by subdivision (11) of subsection (e) of this section.
(e) The provisions of this subsection shall apply to all policies issued on or after
the compliance date established by subdivision (11) of this subsection. (1) Except as
provided in subdivision (7) of this subsection, the adjusted premiums for any policy
shall be calculated on an annual basis and shall be such uniform percentage of the
respective premiums specified in the policy for each policy year, excluding amounts
payable as extra premiums to cover impairments or special hazards and also excluding
any uniform annual contract charge or policy fee specified in the policy in a statement
of the method used in calculating the cash surrender values and paid-up nonforfeiture
benefits, that the present value, at the date of issue of the policy, of all adjusted premiums
shall be equal to the sum of: (A) The then present value of the future guaranteed benefits
provided for by the policy; (B) one per cent of either the amount of insurance, if the
insurance be uniform in amount, or the average amount of insurance at the beginning
of each of the first ten policy years; and (C) one hundred twenty-five per cent of the
nonforfeiture net level premium as hereinafter defined, provided that in applying the
percentage specified in subparagraph (C), no nonforfeiture net level premium shall be
deemed to exceed four per cent of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the beginning of each of the
first ten policy years. The date of issue of a policy for the purpose of this subsection shall
be the date as of which the rated age of the insured is determined; (2) the nonforfeiture net
level premium shall be equal to the present value, at the date of issue of the policy, of
the guaranteed benefits divided by the present value, at such date of issue, of an annuity
of one per annum payable on the date of issue of the policy and on each anniversary of
such policy on which a premium becomes due; (3) in the case of policies which, on a
basis guaranteed in the policy, provide for unscheduled changes in benefits or premiums,
or which provide an option for changes in benefits or premiums other than a change to
a new policy, the adjusted premiums and present values shall initially be calculated on
the assumption that future benefits and premiums do not change from those stipulated
at the date of issue of the policy. At the time of any such change in the benefits or
premiums the future adjusted premiums, nonforfeiture net level premiums and present
values shall be recalculated on the assumption that future benefits and premiums do not
change from those stipulated by the policy immediately after the change; (4) except as
otherwise provided in subdivision (7) of this subsection, the recalculated future adjusted
premiums for any such policy shall be the uniform percentage of the respective future
premiums specified in the policy for each policy year, excluding amounts payable as
extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the
method used in calculating the cash surrender values and paid-up nonforfeiture benefits,
that the present value, at the time of change to the newly defined benefits or premiums,
of all such future adjusted premiums shall be equal to the excess of (A) the sum of: (i)
The then present value of the future guaranteed benefits provided for by the policy and
(ii) the additional expense allowance, if any, over (B) the then cash surrender value, if
any, or present value of any paid-up nonforfeiture benefit under the policy; (5) the
additional expense allowance, at the time of the change to the newly defined benefits
or premiums, shall be the sum of (A) one per cent of the excess, if positive, of the average
amount of insurance at the beginning of each of the first ten policy years subsequent to
the change over the average amount of insurance prior to the change at the beginning
of each of the first ten policy years subsequent to the time of the most recent previous
change, or, if there has been no previous change, the date of issue of the policy; and (B)
one hundred twenty-five per cent of the increase, if positive, in the nonforfeiture net
level premium; (6) the recalculated nonforfeiture net level premium shall be equal to
the amount obtained by dividing (A) by (B) where (A) equals the sum of (i) the nonforfeiture net level premium applicable prior to the change, multiplied by the present value
of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium would have become due had the change
not occurred, and (ii) the present value of the increase in future guaranteed benefits
provided for by the policy, and (B) equals the present value of an annuity of one per
annum payable on each anniversary of the policy on or subsequent to the date of change
on which a premium becomes due; (7) notwithstanding any other provisions of this
subsection, in the case of a policy issued on a substandard basis which provides reduced
graded amounts of insurance so that, in each policy year, such policy has the same
tabular mortality cost as an otherwise similar policy issued on the standard basis which
provides higher uniform amounts of insurance, adjusted premiums and present values
for such substandard policy may be calculated as if it were issued to provide such higher
uniform amounts of insurance on the standard basis; (8) all adjusted premiums and
present values referred to in this section shall be calculated: (A) For all policies of
ordinary insurance, on the basis of the Commissioners' 1980 Standard Ordinary Mortality Table or at the election of the company, for any one or more specified plans of life
insurance, on the basis of the Commissioners' 1980 Standard Ordinary Mortality Table
with ten-year select mortality factors; (B) for all policies of industrial insurance, on the
basis of the Commissioners' 1961 Standard Industrial Mortality Table; (C) for all policies issued in a particular calendar year, on the basis of a rate of interest not exceeding
the nonforfeiture interest rate as defined in this subsection, for policies issued in that
calendar year, provided, that: (i) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest
not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies
issued in the immediately preceding calendar year; (ii) under any paid-up nonforfeiture
benefit, including any paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (a) of this section, shall be calculated on the basis
of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any; (iii) a company may
calculate the amount of any guaranteed paid-up nonforfeiture benefit including any
paid-up additions under the policy on the basis of an interest rate no lower than that
specified in the policy for calculating cash surrender values; (iv) in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any,
offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than
those shown in the Commissioners' 1980 Extended Term Insurance Table for policies
of ordinary insurance and not more than the Commissioners' 1961 Industrial Extended
Term Insurance Table for policies of industrial insurance; (v) for insurance issued on a
substandard basis, the calculation of any such adjusted premiums and present values may
be based on appropriate modifications of the aforementioned tables; (vi) any ordinary
mortality tables, adopted after 1980 by the National Association of Insurance Commissioners that are approved by regulations adopted by the commissioner in accordance
with the provisions of chapter 54 for use in determining the minimum nonforfeiture
standard may be substituted for the Commissioners' 1980 Standard Ordinary Mortality
Table with or without ten-year select mortality factors or the Commissioners' 1980
Extended Term Insurance Table; (vii) any industrial mortality tables, adopted after 1980
by the National Association of Insurance Commissioners that are approved by regulations adopted in accordance with the provisions of chapter 54 by the commissioner
for use in determining the minimum nonforfeiture standard may be substituted for the
Commissioners' 1961 Standard Industrial Mortality Table or the Commissioners' 1961
Industrial Extended Term Insurance Table; (9) the nonforfeiture interest rate per annum
for any policy issued in a particular calendar year shall be equal to one hundred twenty-five per cent of the calendar year statutory valuation interest rate for such policy as
defined in the standard valuation law, rounded to the nearest one quarter of one per cent;
(10) notwithstanding any provision of the general statutes to the contrary, any refiling
of nonforfeiture values or their methods of computation for any previously approved
policy form which involves only a change in the interest rate or mortality table used to
compute nonforfeiture values shall not require refiling of any other provisions of that
policy form; (11) on or after October 1, 1981, but prior to January 1, 1989, any company
may file with the commissioner a written notice of its election to comply with the provisions of this subsection on or after a specified date and the provisions of this subsection
shall apply to such company on or after such specified date. The provisions of this
subsection shall apply to policies issued by any company on or after January 1, 1989.
(f) In the case of any plan of life insurance which provides for future premium
determination, the amounts of which are to be determined by the insurance company
based on then estimates of future experience, or in the case of any plan of life insurance
which is of such nature that minimum values cannot be determined by the methods
described in subsections (a) to (e), inclusive, then: (1) The commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as are the minimum benefits otherwise required by subsections (a) to
(e), inclusive; (2) the commissioner must be satisfied that the benefits and the pattern
of premiums of that plan are not such as to mislead prospective policyholders or insureds;
(3) the cash surrender values and paid-up nonforfeiture benefits provided by such plan
must not be less than the minimum values and benefits required for the plan computed
by a method consistent with the principles of this section, as determined by regulations
adopted by the commissioner in accordance with the provisions of chapter 54.
(g) Any cash surrender value and any paid-up nonforfeiture benefit, available under
the policy in the event of default in a premium payment due at any time other than on
the policy anniversary, shall be calculated with allowance for the lapse of time and the
payment of fractional premiums beyond the last preceding policy anniversary. All values
referred to in subsections (b), (c), (d), and (e) of this section may be calculated upon
the assumption that any death benefit is payable at the end of the policy year of death.
The net value of any paid-up additions, other than paid-up term additions, shall be not
less than the amounts used to provide such additions. Notwithstanding the provisions
of subsection (b) of this section, additional benefits payable: (1) In the event of death or
dismemberment by accident or accidental means; (2) in the event of total and permanent
disability; (3) as reversionary annuity or deferred reversionary annuity benefits; (4) as
term insurance benefits provided by a rider or supplemental policy provision to which,
if issued as a separate policy, this section would not apply; (5) as term insurance on the
life of a child or on the lives of children provided in a policy on the life of a parent of
the child, if such term insurance expires before the child's age is twenty-six, is uniform
in amount after the child's age is one, and has not become paid-up by reason of the death
of a parent of the child; and (6) as other policy benefits additional to life insurance and
endowment benefits, and premiums for all such additional benefits, shall be disregarded
in ascertaining cash surrender values and nonforfeiture benefits required by this section
and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.
(h) This subsection shall apply to all policies issued on or after January 1, 1985.
Any cash surrender value available under the policy in the event of default in a premium
payment due on any policy anniversary shall be in an amount which does not differ by
more than two-tenths of one per cent of either the amount of insurance, if the insurance
be uniform in amount, or the average amount of insurance at the beginning of each of
the first ten policy years, from the sum of the greater of zero and the basic cash value
hereinafter specified and the present value of any existing paid-up additions less the
amount of any indebtedness to the company under the policy. The basic cash value shall
be equal to the present value, on such anniversary, of the future guaranteed benefits
which would have been provided for by the policy, excluding any existing paid-up
additions and before deduction of any indebtedness to the company, if there had been
no default, less the then present value of the nonforfeiture factors, as hereinafter defined,
corresponding to premiums which would have become due on and after such anniversary; provided, that the effects on the basic cash value of supplemental life insurance
or annuity benefits or of family coverage, as described in subsection (b) or (d) of this
section, whichever is applicable, shall be the same as are the effects specified in subsection (b) or (d) of this section, whichever is applicable, on the cash surrender values
defined in the applicable subsection. The nonforfeiture factor for each policy year shall
be an amount equal to a percentage of the adjusted premium for the policy year, as
defined in subsection (e) of this section. Except as is required by this subsection, such
percentage shall be the same percentage for each policy year between the second policy
anniversary and the later of (1) the fifth policy anniversary and (2) the first policy anniversary at which there is available under the policy, a cash surrender value in an amount,
before including any paid-up additions and before deducting any indebtedness, of at
least two-tenths of one per cent of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the beginning of each of the
first ten policy years; and shall be such that no percentage after the later of the two
policy anniversaries specified in this subsection may apply to fewer than five consecutive policy years; provided, that no basic cash value may be less than the value which
would be obtained if the adjusted premiums for the policy, as defined in subsection (d)
or (e) of this section, whichever is applicable, were substituted for the nonforfeiture
factors in the calculation of the basic cash value. All adjusted premiums and present
values referred to in this subsection shall, for a particular policy, be calculated on the
same mortality and interest bases as are used in demonstrating the policy's compliance
with the subsections of this section. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy. Any cash surrender
value available other than in the event of default in a premium payment due on a policy
anniversary, and the amount of any paid-up nonforfeiture benefit available under the
policy in the event of default in a premium payment shall be determined in a manner
consistent with those specified for determining the analogous minimum amounts in
subsections (a), (b), (c), (e) and (g) of this section. The amount of any cash surrender
values and of any paid-up nonforfeiture benefits granted in connection with additional
benefits such as those enumerated in subdivisions (1) to (6), inclusive, of subsection
(g) of this section, shall conform with the principles of this subsection.
(i) This section shall not apply to any reinsurance, group insurance, pure endowment, annuity or reversionary annuity contract, or to any term policy of uniform amount
which provides for no guaranteed nonforfeiture or endowment benefits, or renewal
thereof, of twenty years or less expiring before age seventy-one, for which uniform
premiums are payable during the entire term of the policy, or to any term policy of
decreasing amount, which provides for no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in subsections (d) and (e)
of this section, is less than the adjusted premium so calculated, on a term policy of
uniform amount, or renewal thereof, which provides for no guaranteed nonforfeiture or
endowment benefits issued at the same age and for the same initial amount of insurance
and for a term of twenty years or less expiring before age seventy-one, for which uniform
premiums are payable during the entire term of the policy, or to any policy, which
provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning
of any policy year, calculated as specified in subsections (b), (c), (d) and (e) of this
section, exceeds two and one-half per cent of the amount of insurance at the beginning
of the same policy year or to any policy which shall be delivered outside this state
through an agent or other representative of the company issuing the policy. For purposes
of determining the applicability of this section, the age at expiration for a joint term life
insurance policy shall be the age at expiration of the oldest life.
(j) The provisions of sections 38a-77 and 38a-433 shall apply to ordinary and industrial policies issued by a company before the date of its election to comply with section
38a-130c of the general statutes, revision of 1958, revised to 1981, or January 1, 1981,
whichever occurred first. The provisions of section 38-130c of the general statutes,
revision of 1958, revised to 1981, shall apply to policies issued by a company on and
after the date of such election or on and after January 1, 1981, whichever occurred first,
and before October 1, 1981.
(P.A. 78-312, S. 2; P.A. 81-170, S. 1; P.A. 90-243, S. 55.)
History: P.A. 81-170 permitted a life insurance company to substitute an actuarially equivalent alternative nonforfeiture
benefit upon request of a defaulting policyholder, provided that certain life insurance policies shall contain a statement of the
mortality table, interest rate and method used in determining cash surrender values and nonforfeiture benefits, established a
new formula for calculating cash surrender values and specified the interest rate and mortality tables used in calculating
adjusted premiums and present value for various policies; P.A. 90-243 made technical changes in Subsec. (a); Sec. 38-130c transferred to Sec. 38a-439 in 1991.
See Secs. 38a-77 and 38a-78 re Standard Valuation Law.
Sec. 38a-440. (Formerly Sec. 38-130d). Minimum nonforfeiture benefits for
annuity contract holders upon cessation of payment of considerations under a contract. (a) This section shall not apply to any reinsurance, group annuity purchased under
a retirement plan or plan of deferred compensation established or maintained by an
employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual
retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter
amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an
agent or other representative of the company issuing the contract.
(b) In the case of contracts issued on or after the effective date specified in accordance with the provisions of subsections (k) and (l) of this section, no contract of annuity,
except as stated in subsection (a) of this section, shall be delivered or issued for delivery
in this state unless it contains in substance the following provisions, or corresponding
provisions which in the opinion of the commissioner are at least as favorable to the
contractholder, upon cessation of payment of considerations under the contract: (1) That
upon cessation of payment of considerations under a contract, or upon the written request
of the contract owner, the company shall grant a paid-up annuity benefit on a plan
stipulated in the contract of such value as is specified in subsections (d), (e), (f), (g) and
(i) of this section; (2) if a contract provides for a lump sum settlement at maturity, or at
any other time, that upon surrender of the contract at or prior to the commencement of
any annuity payments, the company shall pay in lieu of any paid-up annuity benefit a
cash surrender benefit of such amount as is specified in subsections (d), (e), (g) and (i)
of this section. The company may reserve the right to defer the payment of such cash
surrender benefit for a period not to exceed six months after demand therefor with
surrender of the contract after making written request and receiving written approval
of the commissioner, provided such request addresses the deferral's necessity and equitability with respect to all policyholders; (3) a statement of the mortality table, if any,
and interest rates used in calculating any minimum paid-up annuity, cash surrender or
death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits; and (4) a statement that any paid-up
annuity, cash surrender or death benefits which may be available under the contract are
not less than the minimum benefits required by the statutes of the state in which the
contract is delivered and an explanation of the manner in which such benefits are altered
by the existence of any additional amounts credited by the company to the contract, any
indebtedness to the company on the contract or any prior withdrawals from or partial
surrenders of the contract. Notwithstanding the requirements of this subsection, any
deferred annuity contract may provide that if no considerations have been received under
a contract for a period of two full years and the portion of the paid-up annuity benefit
at maturity on the plan stipulated in the contract arising from considerations paid prior
to such period would be less than twenty dollars monthly, the company may at its option
terminate such contract by payment in cash of the then present value of such portion of
the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and
interest rate specified in the contract for determining the paid-up annuity benefit, and
by such payment shall be relieved of any further obligation under such contract.
(c) The minimum values as specified in subsections (d), (e), (f), (g) and (i) of this
section of any paid-up annuity, cash surrender or death benefits available under an
annuity contract shall be based upon minimum nonforfeiture amounts as defined in
this subsection: (1) The minimum nonforfeiture amount at any time at or prior to the
commencement of any annuity payments shall be equal to an accumulation up to such
time at rates of interest, as indicated in subdivision (3) of this subsection, of the net
considerations, as defined in this subsection, paid prior to such time, decreased by the
sum of (A) any prior withdrawals from or partial surrenders of the contract accumulated
at rates of interest as indicated in subdivision (3) of this subsection; (B) an annual contract
charge of fifty dollars, accumulated at rates of interest as indicated in subdivision (3) of
this subsection; and (C) the amount of any indebtedness to the company on the contract,
including interest due and accrued. (2) The net considerations for a given contract year
used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half per cent of the gross considerations credited to the contract during
that contract year. (3) The interest rate used in determining minimum nonforfeiture
amounts shall be an annual rate of interest determined as the lesser of three per cent per
annum or the rate calculated pursuant to subparagraphs (A) to (D), inclusive, of this
subdivision, which shall be specified in the contract if the interest rate will be reset: (A)
The five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of
a date, or average over a period of time, rounded to the nearest one-twentieth of one per
cent, specified in the contract no later than fifteen months prior to the contract issue
date or redetermination date under subparagraph (D) of this subdivision; (B) reduced
by one hundred twenty-five basis points; (C) where the resulting interest rate is not less
than one per cent; and (D) where such interest rate applies for an initial period of time
and may be redetermined for additional periods of time. The redetermination date, basis
and period, if any, shall be stated in the contract. The basis is the date or average over
a specified period of time that produces the value of the five-year Constant Maturity
Treasury Rate to be used at each redetermination date. (4) During the period of time or
term that a contract provides substantive participation in an equity indexed benefit, the
contract may increase the reduction described in subparagraph (B) of subdivision (3)
of this subsection by an amount up to an additional one hundred basis points to reflect
the value of the equity index benefit. The present value at the contract issue date, and
at each redetermination date thereafter, of the additional reduction shall not exceed the
market value of the benefit. The commissioner may require a demonstration that the
present value of the additional reduction does not exceed the market value of the benefit.
If there is no such demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction. (5) The commissioner may adopt
regulations, in accordance with chapter 54, to implement the provisions of subdivision
(4) of this subsection and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an
equity index benefit and for other contracts for which the commissioner determines
adjustments are justified.
(d) Any paid-up annuity benefit available under a contract shall be such that its
present value on the date annuity payments are to commence is at least equal to the
minimum nonforfeiture amount on that date. Such present value shall be computed using
the mortality table, if any, and the interest rates specified in the contract for determining
the minimum paid-up annuity benefits guaranteed in the contract.
(e) For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of
surrender of that portion of the maturity value of the paid-up annuity benefit which
would be provided under the contract at maturity arising from considerations paid prior
to the time of cash surrender reduced by the amount appropriate to reflect any prior
withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one per cent higher than the interest
rate specified in the contract for accumulating the net considerations to determine such
maturity value, decreased by the amount of any indebtedness to the company on the
contract, including interest due and accrued, and increased by any existing additional
amounts credited by the company to the contract. In no event shall any cash surrender
benefit be less than the minimum nonforfeiture amount at that time. The death benefit
under such contracts shall be at least equal to the cash surrender benefit.
(f) For contracts which do not provide cash surrender benefits, the present value of
any paid-up annuity benefit available as a nonforfeiture option at any time prior to
maturity shall not be less than the present value of that portion of the maturity value of
the paid-up annuity benefit, provided under the contract arising from consideration paid
prior to the time the contract is surrendered in exchange for, or changed to, a deferred
paid-up annuity, such present value being calculated for the period prior to the maturity
date on the basis of the interest rate specified in the contract for accumulating the net
considerations to determine such maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts which do not
provide any death benefits prior to the commencement of any annuity payments, such
present values shall be calculated on the basis of such interest rate and the mortality
table specified in the contract for determining the maturity value of the paid-up annuity
benefit. In no event shall the present value of a paid-up annuity benefit be less than the
minimum nonforfeiture amount at that time.
(g) For the purpose of determining the benefits calculated under subsections (e) and
(f) of this section, in the case of annuity contracts under which an election may be made
to have annuity payments commence at optional maturity dates, the maturity date shall
be deemed to be the latest date for which election shall be permitted by the contract,
but shall not be deemed to be later than the anniversary of the contract next following
the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever
is later.
(h) Any contract which does not provide cash surrender benefits or does not provide
death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in
the contract that such benefits are not provided.
(i) Any paid-up annuity, cash surrender or death benefits available at any time, other
than on the contract anniversary under any contract with fixed scheduled considerations,
shall be calculated with allowance for the lapse of time and the payment of any scheduled
considerations beyond the beginning of the contract year in which cessation of payment
of considerations under the contract occurs.
(j) For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess
of the greater of cash surrender benefits or a return of the gross considerations with
interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum
nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits,
if any, for the life insurance portion computed as if each portion were a separate contract.
Notwithstanding the provisions of subsections (d), (e), (f), (g) and (i) of this section,
additional benefits payable (1) in the event of total and permanent disability, (2) as
reversionary annuity or deferred reversionary annuity benefits, or (3) as other policy
benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum
nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be
required by this section. The inclusion of such additional benefits shall not be required in
any paid-up benefits, unless such additional benefits separately would require minimum
nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.
(k) On or after October 1, 1978, but prior to January 1, 1981, any company may
file with the commissioner a written notice of its election to comply with the provisions
of this section after a specified date and the provisions of this section shall apply to
annuity contracts issued by such company on or after such specified date. On or after
January 1, 1981, the provisions of this section shall apply to annuity contracts issued
by any company.
(l) On or after May 23, 2003, but prior to July 1, 2005, any company may file with
the commissioner a written notice of its election to comply with the provisions of this
section with respect to contract forms specified in the notice and issued on and after
May 23, 2003, except that (1) no such notice shall be required for a company that elects
to comply with the provisions of this section as set forth in the general statutes, revision
of 1958, revised to January 1, 2003, and (2) on and after July 1, 2005, the provisions of
this section shall apply to all annuity contracts issued by any company on and after July
1, 2005.
(m) The commissioner may adopt regulations, in accordance with chapter 54, to
implement the provisions of this section.
(P.A. 78-312, S. 3; P.A. 03-53, S. 1.)
History: Sec. 38-130d transferred to Sec. 38a-440 in 1991; P.A. 03-53 amended Subsec. (b) to reference Subsec. (l)
and rewrite Subdivs. (1) and (2) to reference written requests, substitute "shall" for "will", "may" for "shall" and "not to
exceed" for "of", amended Subsec. (c) to rewrite Subdivs. (1) and (2), delete former Subdiv. (3) and add new Subdivs.
(3), (4) and (5) re interest calculation, reduction and regulations, amended Subsec. (d) to substitute "rates" for "rate", added
new Subsec. (l) re effective date of provisions, and added new Subsec. (m) re regulations, effective May 23, 2003.
See Secs. 38a-77 and 38a-78 re Standard Valuation Law.
Sec. 38a-441. (Formerly Sec. 38-159c). Notice to insured when life insurance
policy paid up. Any insurance company doing the business of life insurance in this
state which writes an individual life insurance policy delivered or issued for delivery
in this state shall provide notice when such policy is fully paid up. Such notice shall be
in writing and shall be sent or delivered by the insurer to the owner of the policy at the
last-known address of the owner during the year in which the date such final payment
is received by the insurer occurs, or within thirty-one days of such date if later. Each
five years thereafter, written notice shall be so sent or delivered to the owner of the
policy providing notice of the current status of such policy. The provisions of this section
shall not apply to the purchase of a single premium life insurance policy, a universal
life insurance policy, or to the purchase of paid-up additions under a participating life
insurance policy.
(P.A. 87-164.)
History: Sec. 38-159c transferred to Sec. 38a-441 in 1991.
Sec. 38a-442. (Formerly Sec. 38-156). Dating back of policies prohibited. No
policy of life insurance shall be issued or delivered in this state if it purports to be issued
or to take effect as of a date more than six months before the application for the insurance
was made if thereby the applicant would rate at an age younger than at the date when
the application was made according to his age at nearest birthday.
(1949 Rev., S. 6146; 1951, S. 2829d.)
History: Sec. 38-156 transferred to Sec. 38a-442 in 1991.
Sec. 38a-443. (Formerly Sec. 38-147). Premium notes. A company may take
premium notes, or give credit for part of its premiums, in accordance with its usual
course of business.
(1949 Rev., S. 6173.)
History: Sec. 38-147 transferred to Sec. 38a-443 in 1991.
Annotation to former section 38-147:
Cited. 74 C. 353.
Sec. 38a-444. (Formerly Sec. 38-147b). Life insurance policy loans. Interest
rate allowable. (a) For purposes of this section: (1) "Policy" means all contracts of life
insurance which provide for policy loans, certificates insuring persons against loss of
life issued by a fraternal benefit society and annuity contracts which provide for such
loans; (2) "policy loan" means a loan to a policyholder, under the provisions of an
insurance contract, that is secured by the cash surrender value or collateral assignment
of the related policy or contract. "Policy loan" includes: (A) Cash loans, including loans
resulting from early payment benefits or accelerated payment benefits, on contracts
when the terms of the contract specify that such payments are policy loans secured by
the policy, and (B) automatic premium loans, which are loans made in accordance with
policy provisions whereby delinquent premium payments are automatically paid from
the cash value at the end of the established grace period for premium payments; (3)
"policyholder" includes the owner of the policy or the person designated to pay premiums as shown in the records of the life insurer; (4) "published monthly average" means:
(A) Moody's Corporate Bond Yield Average-Monthly Average Corporates as published
by Moody's Investors Service, Inc. or any successor thereto; or (B) in the event that
Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer
published, a substantially similar average, established by the Insurance Commissioner
in regulations the commissioner may adopt in accordance with the provisions of chapter
54; (5) the rate of interest permitted under this section on policy loans includes the rate
of interest charged on reinstatement of policy loans for the period during and after any
lapse of a policy.
(b) Policies issued on or after October 1, 1981, shall provide for loan interest rates
as follows: (1) A provision permitting a maximum interest rate of not more than eight
per cent per annum; or (2) a provision permitting an adjustable maximum interest rate
established from time to time by the life insurer as permitted by this section.
(c) The rate of interest charged on a policy loan made under subdivision (2) of
subsection (b) of this section shall not exceed the higher of the following: (1) The published monthly average for the calendar month ending two months before the date on
which the rate is determined; or (2) the rate used to compute the cash surrender values
under the policy during the applicable period plus one per cent per annum.
(d) If the maximum rate of interest is determined pursuant to subdivision (2) of
subsection (b) of this section, the policy shall contain a provision specifying the frequency at which the rate is to be determined.
(e) The maximum rate for each policy shall be determined at regular intervals at
least once every twelve months, but not more frequently than once every three months.
At the intervals specified in the policy: (1) The rate charged may be increased whenever
the rate is one-half of one per cent or more per annum less than the maximum rate
determined under subsection (c) of this section; (2) the rate charged shall be reduced
whenever the rate is one-half of one per cent or more per annum greater than the maximum rate determined under subsection (c) of this section.
(f) The life insurer shall: (1) Notify the policyholder at the time a cash loan is made
of the initial rate of interest on the loan; (2) notify the policyholder with respect to
premium loans of the initial rate of interest on the loan as soon as is reasonably practicable
after making the initial loan. Notice of the rate of interest need not be given to the
policyholder when a further premium loan is added, except as provided in subdivision (3)
of this subsection; (3) forward to the policyholder with an outstanding loan, reasonable
advance notice of any increase in the rate; and (4) include in the notices required by this
subsection, the substance of the provisions of subsections (b) and (d) of this section.
(g) No policy shall terminate in a policy year as the sole result of a change in the
interest rate during that policy year. The life insurer shall maintain coverage during that
policy year until the time at which it would otherwise have terminated if there had been
no change.
(h) The provisions of this section shall not apply to any insurance contract issued
before October 1, 1981, unless the policyholder agrees in writing to the applicability of
such provisions.
(i) The provisions of sections 37-4, 37-5 and 37-6 shall not affect any loan made
under subdivision (2) of subsection (b) of this section.
(P.A. 81-51; P.A. 00-30, S. 12, 14.)
History: Sec. 38-147b transferred to Sec. 38a-444 in 1991; P.A. 00-30 amended Subdiv. (a)(2) to redefine "policy loan",
and made technical changes in Subdiv. (a)(3) for purposes of gender neutrality, effective January 1, 2001.
See Secs. 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 re fraternal benefit societies.
Sec. 38a-445. (Formerly Sec. 38-160). Deferring the granting of loans and surrender values. No policy of life or endowment insurance shall be issued or delivered
in this state unless it contains a provision that the company may, at its option, defer the
granting of any loan other than to pay premiums on policies in the company, and may,
at its option, defer the granting of any surrender value for a period which shall be stated
in such provision and which shall be not less than sixty days from the date of the application for such loan or surrender value; provided a foreign or alien insurance company
may issue in this state any policy containing provisions required by the laws of its own
state or country respecting the deferring of loans or granting surrender values, and a
domestic insurance company may issue in other states policies which contain provisions
relating to the deferring of loans or granting surrender values required by the laws of
such states.
(1949 Rev., S. 6169; P.A. 90-243, S. 64.)
History: P.A. 90-243 substituted "foreign" for "nonresident" insurance companies and "alien" for "foreign" insurance
companies; Sec. 38-160 transferred to Sec. 38a-445 in 1991.
Sec. 38a-446. (Formerly Sec. 38-149). Discrimination in favor of individuals
prohibited. No life insurance company doing business in this state shall make or permit
any distinction or discrimination in favor of individuals between insurants of the same
class and expectation of life in the amount or payment of premiums or rates charged for
policies of life or endowment insurance, or in the dividends or other benefits payable
thereon, or in any other of the terms and conditions of the contracts it makes; nor shall
any such company or any producer or other person make any contract of insurance or
agreement as to such contract other than is plainly expressed in the policy issued thereon.
(1949 Rev., S. 6139; P.A. 96-193, S. 13, 36.)
History: Sec. 38-149 transferred to Sec. 38a-446 in 1991; P.A. 96-193 substituted "producer" for "agent, subagent,
broker", effective June 3, 1996.
See Sec. 38a-488 re prohibition against discrimination between individuals of same class with respect to premiums or
rates charged.
See Sec. 38a-816 re unfair practices.
See Sec. 38a-825 re prohibition against premium rebate or other special favor.
Sec. 38a-447. (Formerly Sec. 38-150). Discrimination against persons on the
basis of race prohibited. No life insurance company doing business in this state may:
(1) Make any distinction or discrimination between persons on the basis of race, as to
the premiums or rates charged for policies upon the lives of such persons; (2) demand
or require greater premiums from persons of one race than such as are at that time
required by that company from persons of another race of the same age, sex, general
condition of health and hope of longevity; or (3) make or require any rebate, diminution
or discount on the basis of race upon the sum to be paid on any policy in case of the
death of any person insured, nor insert in the policy any condition, nor make any stipulation whereby such person insured shall bind himself, his heirs, executors, administrators
or assigns to accept any sum less than the full value or amount of such policy, in case
of a claim accruing thereon by reason of the death of such person insured, other than
such as are imposed upon all persons in similar cases; and each such stipulation or
condition so made or inserted shall be void.
(1949 Rev., S. 6140; P.A. 90-243, S. 170.)
History: P.A. 90-243 divided the section into Subsecs., substituted "may" for "shall" and deleted references to specific
groups and inserted a general prohibition against discrimination; Sec. 38-150 transferred to Sec. 38a-447 in 1991.
Secs. 38a-448 and 38a-449. (Formerly Secs. 38-151 and 38-152). Affidavit of
examining physician. Sections 38a-448 and 38a-449 are repealed.
(1949 Rev., S. 6141, 6142; P.A. 92-60, S. 28.)
Sec. 38a-450. (Formerly Sec. 38-159). Certain corporations and associations
may be made beneficiaries. Any life insurance company doing business within the
state may issue policies of insurance predicated upon the life or lives of any person or
persons, payable at maturity to any educational, ecclesiastical, benevolent, charitable
or eleemosynary corporation which can legally take and receive testamentary legacies,
irrespective of a financial interest on the part of such corporation in the life of the person
or persons insured.
(1949 Rev., S. 6149.)
History: Sec. 38-159 transferred to Sec. 38a-450 in 1991.
Sec. 38a-451. (Formerly Sec. 38-159a). Trustee as beneficiary of policy. (a)
Unless prohibited by the policy there may be designated, as beneficiary of any policy
issued by any life insurance company, the trustee of a trust to be created in and by the
last will of the insured or in and by an inter vivos trust. Such designation may direct
payment to such trustee as may qualify and be appointed for such trust. Upon the death
of the insured and the qualification of the trustee of such testamentary or inter vivos
trust, such life insurance company shall pay to such trustee the proceeds of the policy
and other sums, if any, due the beneficiary thereunder. If (1) the insured dies intestate,
or (2) no inter vivos trust is created or no such trust is created in the will of the insured
duly admitted to probate, or (3) if such trust is so created but no trustee thereof qualifies
as such within one year after the death of the insured or if the inter vivos trust has been
terminated, such life insurance company shall pay such proceeds and other sums, if any,
to such contingent beneficiary, if any, as may have been designated for that one of such
contingencies (1), (2) or (3) as has occurred, and, if none was so designated, to the
executors or administrators of the insured.
(b) This section shall apply to all such designations of beneficiary by an insured
dying after June 15, 1965, whether or not a trustee shall be identified by name in the
policy.
(February, 1965, P.A. 230, S. 1, 2.)
History: Sec. 38-159a transferred to Sec. 38a-451 in 1991.
Sec. 38a-452. (Formerly Sec. 38-159b). Payment of interest on life insurance
death benefits. (a) In the event an action to recover the proceeds due under a life insurance policy or annuity contract is commenced and results in a judgment against the
insurer, interest thereon shall be paid from the date of the death of an insured or annuitant
in connection with a death claim on a life insurance policy or annuity contract and from
the date of maturity of an endowment contract to the date the verdict is rendered or the
report or decision is made, computed under the provisions of subsection (b) of this
section.
(b) In the event no action has been commenced, interest upon the principal sum
paid to the beneficiary or policyholder respectively shall be computed daily at the rate
of interest currently paid by the insurer on proceeds left under the interest settlement
option, commencing no later than ten days after the date of the death of an insured or
annuitant in connection with a death claim on a life insurance policy or annuity contract
and commencing no later than ten days after the date of maturity of an endowment
contract to the date of payment and shall be added to and be a part of the total sum paid.
(c) The provisions of this section shall not apply to policies or contracts issued prior
to October 1, 1976, which contain specific provisions to the contrary.
(P.A. 76-60, S. 1-3.)
History: Sec. 38-159b transferred to Sec. 38a-452 in 1991.
Sec. 38a-453. (Formerly Sec. 38-161). Rights of creditors of insured against
beneficiary. (a) The beneficiary of any life insurance policy, being a person other than
the insured, whether named as beneficiary in the original policy or subsequently named
as beneficiary in accordance with the terms of the policy, shall be entitled to the proceeds
of the policy as against the representatives or creditors of the insured, unless the policy
was procured or the designation of a beneficiary was made with intent, express or implied, to defraud creditors.
(b) If any such policy was procured or any such designation made with the intent,
express or implied, to defraud creditors, the proceeds thereof shall become a part of the
estate of the insured, and the executor or administrator of the estate shall collect the
insurance and use the proceeds thereof so far as it is required for the expenses of administration and the payment of debts and pay over the balance, if any, to the beneficiary of
the policy. If any premiums paid on the insurance policy were paid with the intent,
express or implied, to defraud creditors, the amount of the premiums so paid, with
interest thereon, shall become a part of the estate and shall be dealt with as above provided.
(c) The company issuing the policy shall be discharged of all liability thereunder
by payment of the proceeds in accordance with the terms of the policy unless, before
such payment, the company has received written notice, from a creditor, executor or
administrator of the insured, that the policy was procured or premiums were paid thereon
with intent to defraud creditors. That notice may be disregarded by the company unless
proper legal proceedings to enforce the claim are begun within three months from the
giving of the notice.
(d) This section shall apply to any policy of insurance issued before July 1, 1933,
but not to policies which matured by the death of the insured before July 1, 1933.
(1949 Rev., S. 6150; P.A. 90-243, S. 65.)
History: P.A. 90-243 divided the section into Subsecs. and made technical changes for statutory consistency; Sec. 38-161 transferred to Sec. 38a-453 in 1991.
Annotations to former section 38-161:
Where husband assigned insurance on his life as security for bank loan, joinder by wife in assignment did not defeat
her right as beneficiary to excess of proceeds above debt to bank. 120 C. 306.
Cited. 39 CS 470, 475.
Annotations to present section:
Cited. 229 C. 459, 462.
Subsec. (c):
Cited. 229 C. 459, 462, 464, 465.
Sec. 38a-454. (Formerly Sec. 38-162). Proceeds of insurance policies and annuities may be held in trust. Any domestic life insurance company shall have power
to hold the proceeds of any policy issued by it under a trust or other agreement upon
such terms and restrictions as to revocation by the policyholder and control by beneficiaries and with such exemptions from the claims of creditors of beneficiaries other than
the policyholder as have been agreed to in writing by such company and the policyholder.
Such insurance company shall not be required to segregate funds so held but may hold
them as a part of its general corporate assets. Similar terms, restrictions and exemptions,
for the benefit of any payee other than the purchaser, may be included by any such
company in any annuity contract or any agreement issued in connection therewith or
supplemental thereto. When any foreign or alien life insurance company doing business
in Connecticut holds the proceeds of a life insurance policy or annuity contract under
any trust or other agreement consistent with its charter or the laws of its domicile, beneficiaries of such trust or other agreement shall be entitled to exemptions from claims of
creditors as hereinbefore provided to the same extent as if the trust or other agreement
were entered into with a domestic life insurance company.
(1949 Rev., S. 6151; P.A. 90-243, S. 66.)
History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" insurance companies; Sec. 38-162 transferred to Sec. 38a-454 in 1991.
Sec. 38a-455. Assignment of incidents of ownership under group life policy.
Any person whose life is insured under any policy of group life insurance is permitted
to make an assignment of all or any part of his incidents of ownership in such insurance,
including, without limitation, any right to designate a beneficiary or beneficiaries thereunder and any right to have an individual policy issued upon termination either of employment or of said policy of group insurance, if applicable, provided the insurer or group
policyholder may prohibit or restrict such assignment by appropriate policy provisions.
Such an assignment, subject to the terms of the policy or agreement between the group
policyholder and the insurer, is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is to be effective,
all rights, benefits and incidents of ownership conferred under the policy and shall entitle
the insurer to deal with the assignee as the owner of such rights, benefits and incidents
of ownership, provided the insurer shall not be affected by any assignment until he has
received written notice thereof.
(P.A. 90-243, S. 147.)
Sec. 38a-456. Notice of cancellation or discontinuation of group life insurance
coverage. (a) Any individual, partnership, corporation or unincorporated association
providing group life insurance coverage for its employees shall furnish each insured
employee, upon cancellation or discontinuation of such life insurance, notice of the
cancellation or discontinuation of such insurance. The notice shall be mailed or delivered
to the insured employee not less than fifteen days next preceding the effective date of
cancellation or discontinuation. Any individual or any such entity which fails to provide
timely notice shall be fined not more than one thousand dollars for each violation. The
Labor Commissioner shall have the authority to assess all such fines. This section shall
apply to any such individual, partnership, corporation or unincorporated association
which substitutes one policy providing such group life insurance coverage for another
such policy with no interruption in coverage.
(b) If any individual or any such entity fails to furnish notice pursuant to subsection
(a) of this section, the individual or entity shall be liable for benefits to the same extent
as the insurer would have been liable if coverage had not been cancelled or discontinued.
(P.A. 90-243, S. 148; May 25 Sp. Sess. P.A. 94-1, S. 104, 130.)
History: May 25 Sp. Sess. P.A. 94-1 amended Subsec. (a) by making technical change, effective July 1, 1994.
Sec. 38a-457. Accelerated benefits of life insurance policies. (a) As used in this
section:
(1) "Accelerated benefits" means benefits payable under a life insurance policy sold
in this state: (A) During the lifetime of the insured, in a lump sum or in periodic payments,
as specified in the policy, provided upon the occurrence of a qualifying event, as defined
in subparagraph (C) of subdivision (3) of this subsection, no such benefits shall be
payable in periodic payments, (B) upon the occurrence of a qualifying event, as defined
in the policy, and certified by a physician who is licensed under the laws of a state or
territory of the United States, or such other foreign or domestic jurisdiction as the Insurance Commissioner may approve and (C) which reduce the death benefits otherwise
payable under the life insurance policy.
(2) "Insurance policy" or "policy" means an insurance policy or certificate or rider
or endorsement thereto.
(3) "Qualifying event" means (A) a medically determinable condition suffered by
the insured which can be expected to result in death in a relatively short period of time,
such as twelve months and may include, but is not limited to, coronary artery disease,
myocardial infarction, stroke, kidney failure or liver disease or (B) a medical condition
which would, in the absence of extensive or extraordinary medical treatment, result in
death in a relatively short period of time, such as twelve months, or (C) a medically
determinable condition suffered by the insured which has caused the insured to be confined for at least six months in an institution which provides necessary care or treatment
of an injury, illness or loss of functional capacity rendered by a certified or licensed health
care provider in a setting other than an acute care hospital, and it has been medically
determined that such insured is expected to remain confined in such institution until
death.
(b) On and after October 1, 1990, any life insurance company or fraternal benefits
society doing business in this state may issue accelerated benefits life insurance policies,
as described in this section, and certificates, riders or endorsements to existing life
insurance policies which provide accelerated benefits, as described in this section.
(c) An accelerated benefits life insurance policy shall not include a policy providing
for disability income protection coverage or long-term care coverage, as defined in
sections 38a-501 and 38a-528.
(d) (1) Death benefits may not be reduced more than the amount of the accelerated
benefits paid plus any applicable actuarial discount appropriate to the policy design for
policies without additional premium payments. When an accelerated benefit is paid, the
amount paid may be considered as (A) a pro rata reduction in cash value or death benefits,
or both, or (B) a lien against the death benefit of the contract and the access to the cash
value shall be restricted to any excess of the cash value over the sum of other outstanding
loans and the lien.
(2) The accidental death benefit, if any, in the policy shall not be affected by the
payment of the accelerated benefit.
(e) All accelerated benefits policies shall comply with the following disclosure requirements:
(1) The face of every accelerated benefits policy shall contain: (A) A description
of coverage which uses the terminology "accelerated" and (B) the following statement:
"Benefits as specified under this policy will be reduced upon receipt of an accelerated
benefit."
(2) Disclosure is required, at the time of application and at the time the accelerated
benefits payment request is submitted, of the potential tax implications of receiving this
payout. The disclosure statement shall indicate that the receipt of accelerated benefits
may be taxable and that the insured should seek assistance from their personal tax advisor. Such disclosure shall be prominently displayed on the first page of the policy.
(3) Prior to or concurrent with the application, the applicant shall be given a written
disclosure including, but not limited to, a brief description of the accelerated benefit,
the effect of the payment of an accelerated benefit on the policy's cash value, death
benefit, premium, policy loans and policy liens, and definitions of the conditions or
occurrences triggering payment of the accelerated benefits. In the event of direct mail
solicitation, the disclosure shall be made upon acceptance of the application.
(4) The insurer shall disclose in its solicitation any separate identifiable premium
for the accelerated benefit. Those insurers indicating that this accelerated benefit is
offered without additional premium shall furnish a written explanation to the Insurance
Commissioner when filing the product.
(5) Prior to or concurrent with the request for accelerated death benefits, the applicant shall be given an illustration demonstrating the effect of the payment of an accelerated benefit on the policy's cash value, death benefit, premium, policy loans and policy liens.
(f) The insurer shall file with the Insurance Department the information concerning
the manner by which the actuarial discount and mortality charge, if any, is calculated
for the accelerated benefit. The commissioner, if he determines that such discount or
mortality charge is excessive, shall hold a hearing to determine such reasonable charges.
(g) Any life insurance policy or any certificate, rider or endorsement thereto, which
provides accelerated benefits pursuant to the occurrence of a qualifying event, as defined
in subparagraph (C) of subdivision (3) of subsection (a) of this section, shall contain
the following statement printed in a conspicuous and readily discernible manner: "This
policy is not a long-term care policy as defined in sections 38a-501 and 38a-528 of the
Connecticut General Statutes."
(h) The Insurance Commissioner may adopt, in accordance with chapter 54, such
regulations as he deems necessary for the purpose of this section, including the authority
to establish the minimum or maximum benefit, if any, payable under an accelerated
benefit policy. Prior to the effective date of any such regulations, any such policy may
be filed with the commissioner and, at his discretion, may be approved.
(P.A. 90-200, S. 1; P.A. 92-60, S. 18.)
History: P.A. 92-60 made technical corrections for statutory consistency.
Sec. 38a-458. Life insurance policies providing long-term care benefits. Regulations. (a) On and after June 16, 1989, any life insurance company doing business in
this state may issue life insurance policies or certificates, or riders or endorsements
thereto, which provide, within the terms and conditions of the policy or certificate, long-term care benefits as described in section 38a-501, provided such company is licensed
for both life and health insurance in this state. The Insurance Commissioner may adopt
regulations, in accordance with chapter 54, to implement the provisions of this section.
Prior to the effective date of such regulations, any such policy, certificate, rider or endorsement may be filed with the commissioner and may be approved at the commissioner's discretion.
(b) Long-term care benefits provided pursuant to subsection (a) of this section shall
not be subject to the requirements of subsection (b) of section 38a-501 or subsection
(b) of section 38a-528.
(c) No insurance producer shall sell any such policy, certificate, rider or endorsement unless the producer is licensed to sell both life and health insurance in this state.
(d) A life insurance policy with long-term care benefits issued pursuant to this section may include a rider that provides long-term care benefits that become payable upon
exhaustion of benefits under the life insurance policy. The elimination period limitations
shall apply only to the life insurance policy to which the rider is attached. Such rider
shall not contain an additional elimination period and may calculate the waiver of premium from the time benefits are payable under such rider.
(P.A. 89-236, S. 2, 3; P.A. 92-60, S. 19; P.A. 00-34, S. 1; P.A. 01-113, S. 30, 42; P.A. 04-174, S. 4.)
History: P.A. 92-60 made technical corrections for statutory consistency; P.A. 00-34 made technical changes in Subsecs.
(a) and (c), and added Subsec. (d) re optional rider that may be added to life insurance policy with long-term care benefits
that provides such benefits that become payable upon exhaustion of benefits under the life insurance policy, and that
elimination period limitations shall apply only to the life insurance policy to which the rider is attached, and that such rider
contain no additional elimination period and may calculate the waiver of premium from time benefits are payable under
the rider; P.A. 01-113 amended Subsec. (c) to substitute "producer" for "agent", effective September 1, 2002; P.A. 04-174 amended Subsec. (b) to insert reference to "subsection (a)" (Revisor's note: In 2005, a reference to "agent" in Subsec.
(c) in said public act was changed editorially to "producer" to conform with P.A. 01-113 as published in the 2003 general
statutes).
Sec. 38a-458a. Option for certain insurers to combine long-term care coverage
with certain life, endowment or annuity coverages. Notwithstanding the provisions
of sections 38a-430, 38a-481 and 38a-501, or any regulation adopted pursuant to said
sections, an insurer licensed for both life and health insurance in this state may combine
the following coverages, by rider or otherwise, within a single-premium policy or contract: (1) Life or endowment insurance or annuity, survivorship annuity or pure endowment insurance; and (2) long-term care insurance.
(P.A. 00-34, S. 2.)
Sec. 38a-459. (Formerly Sec. 38-33a). Funding agreements by domestic life
insurance companies. Establishment of companies' obligations. Segregation of
moneys. (a) Notwithstanding any inconsistent provision in its charter, any domestic life
insurance company may enter into written agreements (1) to fund benefits under any
employee benefit plan as defined in the Employee Retirement Income Security Act of
1974, as amended from time to time, or any similar plan maintained in a foreign country,
(2) to fund the activities of any organization exempt from taxation under Section 501(c)
of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue
code of the United States, as from time to time amended, or of any similar organization
in any foreign country, (3) to fund any program of the government of the United States,
the government of any state, foreign country or political subdivision thereof, or any
agency or instrumentality thereof, (4) to fund any agreement providing for periodic
payments in satisfaction of a claim, or (5) to fund any program of an institution which has
assets in excess of twenty-five million dollars. Under such agreements, the company's
obligations may be established by reference to (A) amounts deposited with the company
and allocated to such company's general account or to one or more separate accounts
in accordance with subsection (b) or (c) of this section or pursuant to section 38a-433,
or (B) an asset portfolio that is not owned or possessed by such company. The issuance
or delivery of a funding agreement in this state shall constitute doing an insurance business in this state.
(b) After adoption of a resolution by its board of directors and certification thereof
to the Insurance Commissioner, any amounts which are paid to or held by such company
in accordance with the terms of such written agreements may be allocated to one or
more separate accounts. In connection with such separate accounts any such company
may issue, subject to the terms of such written agreement, individual or group policies
or contracts with benefits payable in fixed or variable amounts. The income, if any, and
gains or losses, realized or unrealized, on each such account may be credited to or
charged against the amount allocated to such account in accordance with such
agreement, without regard to the other income, gains or losses of the company. Notwithstanding any inconsistent provision in its charter or in any section of the general statutes,
the amounts allocated to such accounts and accumulations thereon may be invested and
reinvested in any class of loans and investments specified in such agreement, and such
loans and investments shall not be included in applying the limitations provided in
sections 38a-102 to 38a-102h, inclusive. Amounts allocated by an insurance company
to separate accounts in the exercise of the power granted by this section shall be owned
by the company, and the company shall not be, or hold itself out to be, a trustee in respect
to such amounts, except that such amounts shall not be chargeable with liabilities arising
out of any other business the company may conduct.
(c) Reserves for fixed retirement benefits, or other benefits incidental thereto, in
the course of payment, may be maintained in a separate account with the approval of
the Insurance Commissioner and under such conditions as he may prescribe, except that
any such reserves which are attributable to contributions by a self-employed individual
on his own behalf, or to contributions subject to Section 403(b) of the Internal Revenue
Code of 1986, or any subsequent corresponding internal revenue code of the United
States, as from time to time amended, shall not be maintained in a separate account.
(1959, P.A. 317, S. 1; February, 1965, P.A. 515, S. 1; 1967, P.A. 530, S. 1; 1969, P.A. 465; P.A. 77-614, S. 163, 610;
P.A. 80-482, S. 273, 348; P.A. 83-208, S. 1, 3; P.A. 85-125; P.A. 89-211, S. 43; P.A. 93-239, S. 14; P.A. 97-108, S. 2.)
History: 1965 act authorized issuance of policies with benefits payable in both fixed and variable amounts and amended
provisions where necessary to distinguish between the two types; 1967 act deleted exemption to provisions for "amounts
contributed by a participant who is entitled to retirement benefits, or benefits incidental thereto, under such a pension,
retirement or profit-sharing plan" in Subsec. (b); 1969 act deleted proviso in Subsec. (a) which required that plan must
cover twenty-five or more individuals at time of agreement if benefits are to be payable in variable amounts and specified
that separate accounts are not chargeable with liabilities arising from company's other business and entirely replaced
Subsec. (b) which had exempted amounts applied to purchase of fixed retirement benefits and other incidental benefits
from provisions of section; P.A. 77-614 placed insurance commissioner within the department of business regulation and
made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance
commissioner and division to prior independent status and abolished the department of business regulation; P.A. 83-208
amended Subsec. (a) to provide that any domestic life insurance company may enter into written agreements to fund
benefits under any employee benefit plan, fund the activities of tax-exempt organizations, or fund any governmental
program, deleting less specific provisions; P.A. 85-125 divided former Subsec. (a) into Subsecs. (a) and (b), relettering
Subsec. (c) accordingly, authorized insurance companies to fund agreements providing for periodic payments in satisfying
a claim and to fund programs of institutions having assets of more than twenty-five million dollars, allowed companies to
allocate funds from agreements to their general accounts and stated that issuance or delivery of agreements in this state
constitutes doing an insurance business; P.A. 89-211 clarified references to the Internal Revenue Code of 1986; Sec. 38-33a transferred to Sec. 38a-459 in 1991; P.A. 93-239 made technical corrections for statutory consistency and substituted
"sections 38a-102 to 38a-102h, inclusive" for "section 38a-95"; P.A. 97-108 amended Subsec. (a) to add Subparas. (A)
and (B) re establishing a company's obligations and to make technical changes.
Sec. 38a-460. Accumulation fund arrangements. Definition. (a) Any domestic
life insurance company may provide accumulation fund arrangements in connection
with the making of any life insurance contract or annuity contract, including any contract
that makes life insurance or annuities available on an optional basis, and such company
may insure the balance accumulated under such accumulation fund arrangements by
promising a rate of return on such arrangements in fixed or variable amounts or in any
combination of fixed and variable amounts. As used in this section and in section 38a-92a, "accumulation fund arrangement" means an arrangement under which amounts
are allowed to accumulate at the rate or rates credited by a life insurance company and
under which accumulated amounts may be applied in the future to the purchase of life
insurance coverage or annuitized benefits or may be distributed through one or more
cash payments.
(b) Under such accumulation fund arrangements, the company's obligations may
be established by reference to (1) amounts deposited with the company and allocated
to its general account or one or more of its separate accounts pursuant to section 38a-433, or (2) an asset portfolio that is not owned or possessed by the insurance company.
(P.A. 97-108, S. 1.)
Secs. 38a-461 to 38a-463. Reserved for future use.
PART II
BURIAL CONTRACTS
Sec. 38a-464. (Formerly Sec. 38-32). Burial contracts; license from Insurance
Commissioner. A "burial contract" or "burial certificate", within the meaning of this
section, is any instrument in writing whereby any person, firm, corporation or association, in consideration of the payment of a specified sum of money or for any other
valuable consideration, promises or agrees to embalm or inter or otherwise dispose of,
or to procure the embalmment or interment or other disposal of, the remains of any
person who is living at the time of the execution of such instrument. No person, firm,
corporation or association shall transact the business of issuing burial contracts or burial
certificates until such person, firm, corporation or association has procured from the
commissioner a license to conduct such business under such regulations as the commissioner prescribes. All the applicable provisions of the general statutes which pertain to
and govern the issuance of policies of life insurance are made applicable to and shall
govern the issuance of burial contracts or burial certificates. Any person who violates
any provision of this section shall be fined not more than five hundred dollars or imprisoned not more than one year or both.
(1949 Rev., S. 6091.)
History: Sec. 38-32 transferred to Sec. 38a-464 in 1991.
PART III
VIATICAL SETTLEMENTS
Sec. 38a-465. Definitions. As used in sections 38a-465 to 38a-465q, inclusive, and
subdivision (20) of section 38a-816:
(1) "Accredited investor" means an accredited investor, as defined in 17 CFR Section 230.501(a), as amended from time to time.
(2) "Advertising" or "advertisement" means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet or similar communications media, including,
but not limited to, film strips, motion pictures and videos, published, disseminated,
circulated or placed before the public, directly or indirectly, for the purpose of creating
an interest in or inducing a person to purchase or sell a life insurance policy or an interest
in a life insurance policy pursuant to a viatical settlement contract or a viatical settlement
purchase agreement.
(3) "Chronically ill" means: (A) Being unable to perform at least two activities of
daily living, including, but are not limited to, eating, toileting, transferring, bathing,
dressing or continence; (B) requiring substantial supervision to protect from threats to
health and safety due to severe cognitive impairment; or (C) having a level of disability
similar to that described in subparagraph (A) of this subdivision as determined by the
federal Secretary of Health and Human Services.
(4) "Commissioner" means the Insurance Commissioner.
(5) (A) "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate
that is the subject of a viatical settlement contract, but:
(i) Whose principal activity related to the transaction is providing funds to effect
the viatical settlement or purchase of one or more viaticated policies; and
(ii) Who has an agreement in writing with one or more licensed viatical settlement
providers to finance the acquisition of viatical settlement contracts.
(B) Financing entity does not include a nonaccredited investor or viatical settlement
purchaser.
(6) "Financing transaction" means any transaction in which financing is obtained
for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viaticated policies or interests in such contracts or policies, including,
but not limited to, any secured or unsecured financing, any securitization transaction or
any securities offering which is registered or exempt from registration under federal or
state securities law, or in which one or more viatical settlement contracts, viaticated
policies or interests therein are sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of.
(7) "Person" means a natural person or a legal entity, including, but not limited to,
an individual, partnership, limited liability company, association, trust or corporation.
(8) "Nonaccredited investor" means an investor that does not qualify as an accredited investor.
(9) "Policy" means an individual or group policy, group certificate, contract or
arrangement of life insurance affecting the rights of a resident of the state or bearing a
reasonable relation to the state, regardless of whether delivered or issued for delivery
in this state.
(10) "Qualified institutional buyer" means a qualified institutional buyer, as defined
in 17 CFR Section 230.144A, as amended from time to time.
(11) "Related provider trust" means a titling trust or other trust established by a
licensed viatical settlement provider or a financing entity for the sole purpose of holding
the ownership or beneficial interest in purchased policies in connection with a financing
transaction.
(12) "Special purpose entity" means a corporation, partnership, trust, limited liability company or other similar entity formed solely to provide, either directly or indirectly,
access to institutional capital markets for a financing entity or licensed viatical settlement
provider.
(13) "Terminally ill" means having an illness or sickness that can reasonably be
expected to result in death in twenty-four months or less.
(14) "Viatical settlement" means a transaction between a viator and a viatical settlement provider in which the viatical settlement provider pays compensation or other
value in return for the viator's assignment, transfer, sale, devise or bequest to the viatical
settlement provider of the ownership of, or the death benefit payable under, a life insurance policy or a certificate.
(15) "Viatical settlement broker" or "broker" means a person who, on behalf of a
viator and for a fee, commission or other valuable consideration, offers or attempts to
negotiate viatical settlement contracts between a viator and one or more viatical settlement providers. "Viatical settlement broker" does not include an attorney, certified public accountant or a financial planner accredited by a nationally recognized accreditation
agency who is retained to represent the viator and whose compensation is not paid
directly or indirectly by the viatical settlement provider or viatical settlement purchaser.
(16) "Viatical settlement contract" means a written agreement establishing the
terms under which compensation or anything of value will be paid, which compensation
or value is less than the expected death benefit of a policy in return for the viator's
assignment, transfer, sale, devise or bequest of the death benefit or ownership of any
portion of the policy. A viatical settlement contract includes, but is not limited to, (A)
a contract for a loan or other financing transaction with a viator secured primarily by
an individual or group life insurance policy, other than a loan by a life insurance company
pursuant to the terms of the life insurance contract, or a loan secured by the cash value of
a policy, or (B) an agreement with a viator to transfer ownership or change the beneficiary
designation at a later date regardless of the date that compensation is paid to the viator.
(17) "Viatical settlement investment agent" means a person who is an appointed or
contracted agent of a licensed viatical settlement provider who solicits or arranges the
funding for the purchase of a viatical settlement by a viatical settlement purchaser and
who is acting on behalf of a viatical settlement provider.
(18) "Viatical settlement provider" means a person, other than a viator, who enters
into or effectuates a viatical settlement contract. Viatical settlement provider does not
include:
(A) A bank, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life insurance policy as collateral
for a loan;
(B) The issuer of a life insurance policy providing accelerated benefits pursuant to
section 38a-457 and pursuant to the contract;
(C) An authorized or eligible insurer that provides stop loss coverage to a viatical
settlement provider, viatical settlement purchaser, financing entity, special purpose entity or related provider trust;
(D) A natural person who enters into or effectuates no more than one agreement in
a calendar year for the transfer of a life insurance policy for any value less than the
expected death benefit;
(E) A financing entity;
(F) A special purpose entity;
(G) A related provider trust;
(H) A viatical settlement purchaser; or
(I) An accredited investor or qualified institutional buyer who purchases a viaticated
policy from a viatical settlement provider.
(19) "Viatical settlement purchase agreement" means a contract or agreement, entered into by a viatical settlement purchaser, to which the viator is not a party, to purchase
a life insurance policy or an interest in a life insurance policy, that is entered into for
the purpose of deriving an economic benefit.
(20) "Viatical settlement purchaser" means a person who gives a sum of money as
consideration for a life insurance policy or an interest in the death benefits of a life
insurance policy, or a person who owns or acquires or is entitled to a beneficial interest
in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance
policy that has been or will be the subject of a viatical settlement contract, for the purpose
of deriving an economic benefit. Viatical settlement purchaser does not include:
(A) A licensee under this part;
(B) An accredited investor or qualified institutional buyer;
(C) A financing entity;
(D) A special purpose entity; or
(E) A related provider trust.
(21) "Viaticated policy" means a life insurance policy or certificate that has been
acquired by a viatical settlement provider pursuant to a viatical settlement contract.
(22) "Viator" means the owner of a life insurance policy or a certificate holder under
a group policy who enters or seeks to enter into a viatical settlement contract. For the
purposes of this part, a viator shall not be limited to an owner of a life insurance policy
or a certificate holder under a group policy insuring the life of an individual with a
terminal or chronic illness or condition except where specifically provided. Viator does
not include:
(A) A licensee under this part;
(B) An accredited investor or qualified institutional buyer;
(C) A financing entity;
(D) A special purpose entity; or
(E) A related provider trust.
(P.A. 97-202, S. 1, 18; P.A. 99-104, S. 1, 2; 99-145, S. 4, 23; P.A. 03-152, S. 1.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-104 redefined "viatical settlement contract" and "viatical
settlement provider"; P.A. 99-145 amended introductory language to substitute "subdivision (20) of section 38a-816" for
"subdivision (19) of section 38a-816", effective June 8, 1999; P.A. 03-152 replaced former Subdivs. (1) to (13) with new
Subdivs. (1) to (22) re definitions, and deleted "subsection (a) of section 38a-11" and replaced "38a-465 to 38-465m" with
"38a-465 to 38a-465q" re applicability of definitions.
Sec. 38a-465a. Licensing of viatical settlement providers, brokers and investment agents. (a) Except as otherwise provided in this part, no person may act as a
viatical settlement provider, viatical settlement broker or viatical settlement investment
agent until the person is licensed by the commissioner pursuant to this section, except
that any person who holds a resident or nonresident insurance producer license pursuant
to chapter 702 may act as a viatical settlement broker, and shall be subject to the provisions of subsection (a) of section 38a-11, sections 38a-465 to 38a-465q, inclusive, and
subdivision (20) of section 38a-816, as if such person is a licensed viatical settlement
broker.
(b) Any applicant for a license as a viatical settlement provider, viatical settlement
broker or viatical settlement investment agent shall submit written application to the
commissioner. Such applicants shall provide such information as the commissioner
requires. All initial applications shall be accompanied by a filing fee specified in section
38a-11.
(c) Upon the filing of an application and full payment of the license fee, the commissioner shall investigate the applicant and shall issue a license if the commissioner determines that:
(1) The applicant has provided a detailed plan of operation;
(2) The applicant is competent and trustworthy, and intends to act in good faith
pursuant to the license applied for;
(3) The applicant has a good business reputation and adequate experience, training
or education so as to be qualified in the business for which the license is applied for;
(4) If the applicant is a corporation, partnership, limited liability company or other
legal entity, the applicant has provided a certificate of good standing from its state of
domicile and, if such applicant is not domiciled in this state, a certificate of good standing
from this state dated not more than fifteen days before or after the date of filing of the
application; and
(5) Neither the applicant, nor any partner, key manager, director, officer or majority
stockholder of the applicant has been convicted of a felony.
(d) Any license issued for a viatical settlement provider, a viatical settlement broker
or a viatical settlement investment agent shall be in force only until the last day of March
in each year, but may be renewed by the commissioner without formality other than
proper application. The fees for such licenses shall be assessed annually as provided in
section 38a-11. If such broker, provider or investment agent fails to timely pay the
renewal fee, such license shall be automatically revoked if the license fee is not received
by the commissioner not later than the fifth day after the commissioner sends by first
class mail a written notice of nonrenewal to the principal office of the broker, provider
or investment agent, provided such notice may only be mailed after said last day of
March.
(e) The commissioner may, at any time, require the applicant to fully disclose the
identity of all of its stockholders, partners, key management personnel, directors, officers, members and employees, and the commissioner may deny any application for a
license if the commissioner determines that any partner, key manager, director, officer,
employee stockholder or member thereof who may materially influence the applicant's
conduct fails to meet any of the standards set forth in sections 38a-465 to 38a-465q,
inclusive.
(f) A viatical settlement provider, viatical settlement broker or viatical settlement
investment agent shall provide to the commissioner new or revised information about
officers, stockholders holding ten per cent or more of the company's stock, partners,
directors, members or designated employees not later than thirty days after the change
in information.
(g) A viatical settlement provider license, a viatical settlement broker license or a
viatical settlement investment agent license issued to a corporation, partnership, limited
liability company or other legal entity authorizes all of such legal entity's stockholders,
partners, key managers, directors, officers and employees named in the application for
such license, and any supplements to the application, to act on such entity's behalf as
if such individuals are licensed. Such authorization shall terminate upon the expiration,
suspension or revocation of the viatical settlement provider license, a viatical settlement
broker license or a viatical settlement investment agent license.
(h) The commissioner shall maintain a complete listing of all viatical settlement
providers, viatical settlement brokers and viatical settlement investment agents licensed
in this state which shall be available to the general public for inspection.
(P.A. 97-202, S. 2, 18; P.A. 99-104, S. 3; 99-145, S. 5, 23; P.A. 03-152, S. 2.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-104 amended Subsec. (d) to include "members" among those
whose identity may be disclosed, and to substitute "stockholder or member thereof who may materially influence the
applicant's conduct fails to meet any of the standards set forth in sections 38a-465 to 38a-465m, inclusive" for "majority
stockholder fails to meet any of the criteria set forth in subsection (f) of this section" re grounds for denial of license; P.A.
99-145 amended Subsec. (a) to substitute "Except as otherwise provided in this part" for "Except as provided in subsection
(a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision (19) of section 38a-816", and substituted
"subdivision (20) of section 38a-816" for "subdivision (19) of section 38a-816", effective June 8, 1999; P.A. 03-152 added
references to "viatical settlement investment agents", made licensees subject to provisions of Secs. 38a-465n to 38a-465q,
repositioned provisions of former Subsec. (f) to new Subsec. (c), revising therein Subdiv. (2) to substitute "license applied
for" for "license" and Subdiv. (3) re qualification in the business for which the license is applied for, added new Subsec.
(f) re new or revised information about officers, stockholders holding ten per cent or more of stock, partners, directors,
members or designated employees, redesignated existing Subsecs. (c), (d), (e) and (g) as new Subsecs. (d), (e), (g) and (h),
and made technical changes.
Sec. 38a-465b. Denial, suspension or revocation of license. Refusal to renew
license. Appeals. Fines. (a) The commissioner may deny a license application, or suspend, revoke or refuse to renew the license of any viatical settlement provider, viatical
settlement broker or viatical settlement investment agent if the commissioner determines that:
(1) There was a material misrepresentation in the license application or in other
information submitted to the commissioner;
(2) The licensee, or any partner, key manager, director, officer or majority stockholder of the licensee has been convicted of a felony, is subject to a final administrative
action to suspend or revoke a license granted by the chief insurance regulatory official
of another state, or is otherwise shown to be untrustworthy or incompetent to act as a
viatical settlement provider, viatical settlement broker or viatical settlement investment
agent;
(3) The licensee has wilfully violated any of the provisions of this part;
(4) The viatical settlement provider demonstrates a pattern of unreasonably low
payments to viators;
(5) The licensee has been found guilty of or has pleaded guilty or nolo contendere
to, any felony, or to a misdemeanor involving fraud or moral turpitude regardless of
whether a judgment or conviction has been entered by the court;
(6) The viatical settlement provider has entered into any viatical settlement contract
that has not been approved pursuant to sections 38a-465 to 38a-465q, inclusive;
(7) The viatical settlement provider has failed to honor contractual obligations set
out in a viatical settlement contract or a viatical settlement purchase agreement;
(8) The licensee no longer meets the requirements for initial licensure; or
(9) The viatical settlement provider has assigned, transferred or pledged a viatical
policy to a person other than a viatical settlement provider licensed in this state, a viatical
settlement purchaser, an accredited investor, a qualified institutional buyer, a financing
entity, special purpose entity or related provider trust.
(b) If the commissioner denies a license application, or suspends, revokes or refuses
to renew the license of a viatical settlement provider, viatical settlement broker or viatical
settlement investment agent, the applicant or licensee aggrieved by such denial, suspension, revocation or refusal to renew a license may appeal such action in accordance with
chapter 54. Hearings may be held by the commissioner or by any person designated by
the commissioner. Whenever an individual other than the commissioner acts as the
hearing officer, the individual shall submit to the commissioner a memorandum of findings and recommendations upon which the commissioner may base a decision.
(c) In addition to denying a license application, or suspending, revoking or refusing
to renew a license, the commissioner may assess a fine of up to one thousand dollars
against a viatical settlement provider or viatical settlement investment agent for each
wilful violation by the viatical settlement provider of any provision of this part or regulations adopted pursuant to this part.
(d) In addition to denying a license application, or suspending, revoking or refusing
to renew a license, the commissioner may assess a fine of up to one thousand dollars
against a viatical settlement broker if:
(1) Such viatical settlement broker has knowingly received a commission or other
payment or benefit from a viatical settlement provider who is unlicensed in this state
in connection with a viatical settlement contract entered into with a viator resident in
this state;
(2) Such viatical settlement broker has defrauded, misled or mistreated viators; or
(3) Such viatical settlement broker has wilfully violated any provision of sections
38a-465 to 38a-465q, inclusive, or regulations adopted pursuant to said sections.
(P.A. 97-202, S. 4, 18; P.A. 99-104, S. 4; 99-145, S. 6, 23; P.A. 03-152, S. 3.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-104 amended Subsec. (a) to add Subdivs. (4) to (9), inclusive,
amended Subsec. (b) to substitute the right of the applicant or licensee to appeal the denial, suspension, revocation or
refusal to renew a license for the prior requirement that the commissioner hold a hearing before taking such action, and
amended section to delete references to "subsection (a) of section 38a-11" and "subdivision (19) of section 38a-816"; P.A.
99-145 amended Subdiv. (a)(3) and Subsec. (c) to substitute "this part" for "subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision (19) of section 38a-816", and amended Subdiv. (d)(3) to delete reference to
"subsection (a) of section 38a-11", and "subdivision (19) of section 38a-816", effective June 8, 1999; P.A. 03-152 added
references to "viatical settlement investment agents", made persons subject to Secs. 38a-465n to 38a-465q, amended
Subsec. (a)(9) to substitute "a viatical settlement purchaser, an accredited investor, a qualified institutional buyer, a financing entity, special purpose entity or related provider trust" for "a financing entity", deleted "the provisions of" re chapter
54 and substituted "an individual" for "a person" in Subsec. (b), and made technical changes.
Sec. 38a-465c. Contract form and disclosure statements. Filing and approval
requirements. No person may use any form of viatical settlement contract or disclosure
statement in this state when dealing with a viator unless such form has been filed with and
approved by the commissioner. The commissioner may disapprove a viatical settlement
contract or disclosure statement, if the commissioner finds any provision in said form
is unreasonable, contrary to the interests of the public, fails to comply with the provisions
of sections 38a-465 to 38a-465q, inclusive, or is misleading to viators or the public.
(P.A. 97-202, S. 5, 18; P.A. 99-145, S. 7, 23; P.A. 03-152, S. 4.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 deleted reference to "subsection (a) of section 38a-11",
and "subdivision (19) of section 38a-816", effective June 8, 1999; P.A. 03-152 substituted "person" for viatical settlement
provider, broker or agent re prohibitions on use of unapproved forms, deleted provision re contract or disclosure statements
deemed approved sixty days after filing, added "contrary to the interests of the public" and failure to comply with Secs.
38a-465n to 38a-465q re grounds for disapproval of contracts or statements and made a technical change.
Sec. 38a-465d. Annual statements. Confidentiality of insured's information.
Reasons for disclosure of insured's identity. (a) Except as provided in subsection (b)
of this section, on or before the last day of March of each year, each viatical settlement
provider shall file with the commissioner an annual statement containing such information as the commissioner may prescribe. The commissioner shall adopt regulations, in
accordance with chapter 54, to prescribe the contents of such annual statements.
(b) Notwithstanding the provisions of subsection (a) of this section, no licensee
may submit to the commissioner information which identifies any viator except with
the express written permission of such viator or the viator's estate or representative.
(c) Except as otherwise required or permitted by law, no person, including, but not
limited to, any viatical settlement provider, viatical settlement investment agent, viatical
settlement broker, insurance company, insurance producer, information bureau, rating
agency or company, or any other person with actual knowledge of an insured's identity,
may disclose such identity to any other person unless such disclosure: (1) Is necessary
to effect a viatical settlement between the viator and a viatical settlement provider and the
viator has provided prior written consent to such disclosure; (2) is provided in response to
an investigation by the commissioner or any other governmental office or agency; (3)
is necessary to effect a viatical settlement purchase agreement between the viatical
settlement purchaser and a viatical settlement provider and the viator and insured have
provided prior written consent to the disclosure; (4) is a term of or condition to the
transfer of a policy by one viatical settlement provider to another viatical settlement
provider; (5) is necessary to permit a financing entity, related provider trust or special
purpose entity to finance the purchase of policies by a viatical settlement provider and
the viator and insured have provided prior written consent to the disclosure; (6) is necessary to allow the viatical settlement provider or viatical settlement broker or their authorized representatives to make contacts for the purpose of determining health status; or
(7) is required to purchase stop loss coverage.
(d) The commissioner shall not disclose the names of or other data identifying viators unless such disclosure is required by law.
(P.A. 97-202, S. 6, 18; P.A. 03-152, S. 5.)
History: P.A. 97-202 effective January 1, 1998; P.A. 03-152 amended Subsec. (a) to delete "the provisions of" re
chapter 54, and amended Subsec. (c) to substitute "viatical settlement investment agent" for "viatical settlement agent"
and "knowledge of an insured's identity" for "knowledge of a viator's identity", reposition certain provisions of former
Subdiv. (3) re term of or condition to a transaction or transfer to new Subdiv. (4) and add new Subdivs. (3) and (5) to (7),
inclusive, re permitted reasons for disclosure.
Sec. 38a-465e. Examination of licensees and applicants. Commissioner's access to records. Retention of records. Expenses of examination. (a) When the commissioner deems it reasonably necessary to protect the interests of the public, the commissioner may examine the business and affairs of any licensee or applicant for a license.
(b) Licensees shall maintain records of each viatical settlement and, subject to the
provisions of section 38a-465d, such records shall be available, during reasonable business hours, to the commissioner for inspection for the five-year period following the
insured's death. Subject to the provisions of said section, the commissioner shall also
have the authority to order any licensee or applicant to produce any records, books, files
or other information reasonably necessary to ascertain whether the licensee or applicant
is acting or has acted in violation of any provision of sections 38a-465 to 38a-465m,
inclusive, or of any regulations adopted pursuant to said sections. The licensee or applicant shall pay all expenses incurred by the commissioner in conducting any inspection
or examination.
(P.A. 97-202, S. 7, 18; P.A. 99-104, S. 5; 99-145, S. 8, 23.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-104 amended Subsec. (a) to substitute "When the commissioner
deems it reasonably necessary to protect the interests of the public" for "In response to a complaint concerning a license
or in connection with the review of an application for a license ..." re the commissioner's examination authority, amended
Subsec. (b) to substitute "five-year period" for "three-year period" re inspection period following the insured's death, and
deleted reference to "subsection (a) of section 38a-11" and "subdivision (19) of section 38a-816"; P.A. 99-145 deleted
reference to "subsection (a) of section 38a-11" and "subdivision (19) of section 38a-816", effective June 8, 1999.
Sec. 38a-465f. Required disclosures. (a) With each application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall provide the
viator with at least the following disclosures not later than at the time the application
for the viatical settlement contract is signed by all parties. Disclosure to a viator shall
include distribution of a brochure developed or authorized by the commissioner describing the process of viatical settlements. The disclosure document shall contain the following language: "All medical, financial or personal information solicited or obtained by
a viatical settlement provider or viatical settlement broker about an insured, including
the insured's identity or the identity of family members, a spouse or a significant other
may be disclosed as necessary to effect the viatical settlement between the viator and
the viatical settlement provider. If you are asked to provide this information, you will
be asked to consent to the disclosure. The information may be provided to someone
who buys the policy or provides funds for the purchase. You may be asked to renew
your permission to share information every two years." The disclosure shall be provided
in a separate document that is signed by the viator and the viatical settlement provider
or viatical settlement broker and shall provide at least the following disclosures:
(1) There are possible alternatives to viatical settlement contracts including any
accelerated death benefits or policy loans offered under the viator's life insurance policy;
(2) Some or all of the proceeds of the viatical settlement may be taxable under
federal income tax, and assistance should be sought from a professional tax advisor;
(3) Receipt of the viatical settlement proceeds may adversely affect the viator's
eligibility for Medicaid or other government benefits or entitlements, and advice should
be obtained from the appropriate governmental agencies or advisors;
(4) The viatical settlement provider may assign or otherwise transfer its interests
in the viaticated policy to a third party;
(5) The viator has the right to rescind a viatical settlement contract for fifteen calendar days after the receipt of the viatical settlement proceeds by the viator, as provided
in subsection (c) of section 38a-465g. If the insured dies during the rescission period,
the settlement contract shall be deemed to have been rescinded, subject to repayment
of all viatical settlement proceeds and any premiums, loans and loan interest to the
viatical settlement provider or viatical settlement purchaser;
(6) Proceeds of the viatical settlement may be subject to the claims of general creditors;
(7) Funds will be sent to the viator within two business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that
ownership of the viatical policy or interest in the certificate has been transferred and
the beneficiary has been designated pursuant to sections 38a-465 to 38a-465q, inclusive;
(8) Entering into the viatical settlement contract may cause other rights or benefits,
including conversion rights and waiver of premium benefits that may exist under the
policy or certificate, to be forfeited by the viator and that assistance should be sought
from a financial advisor;
(9) The insured may be contacted by either the viatical settlement provider or broker
or its authorized representative for the purpose of determining the insured's health status.
This contact is limited to once every three months following the date the viatical settlement proceeds are released to the viator if the insured has a life expectancy of more than
one year, and no more than once per month following such date if the insured has a life
expectancy of one year or less.
(b) A viatical settlement provider shall provide the viator with at least the following
disclosures not later than the date the viatical settlement contract is signed by all parties.
The disclosures shall be conspicuously displayed in the viatical settlement contract or
in a separate document signed by the viator and the viatical settlement provider or viatical
settlement broker, and shall provide at least the following disclosures:
(1) The affiliation, if any, between the viatical settlement provider and the issuer
of the insurance policy to be viaticated;
(2) The name, address and telephone number of the viatical settlement provider;
(3) If an insurance policy to be viaticated has been issued as a joint policy or involves
family riders or any coverage of a life other than the insured under the policy to be
viaticated, the viator shall be informed of the possible loss of coverage on the other lives
under the policy and shall be advised to consult with the viator's insurance producer or
the insurer issuing the policy for advice on the proposed viatical settlement;
(4) The dollar amount of the current death benefit payable to the viatical settlement
provider under the policy or certificate. If known, the viatical settlement provider shall
also disclose the availability of any additional guaranteed insurance benefits, the dollar
amount of any accidental death and dismemberment benefits under the policy or certificate and the viatical settlement provider's interest in those benefits;
(5) The name, business address, and telephone number of the independent third
party escrow agent, and the fact that the viator or owner may inspect or receive copies
of the relevant escrow or trust agreements or documents.
(c) If the viatical settlement provider transfers ownership or changes the beneficiary
of the insurance policy, the viatical settlement provider shall communicate the change
in ownership or beneficiary to the insured not later than twenty days after the change.
(d) A viatical settlement provider or its viatical settlement investment agent shall
provide the viatical settlement purchaser with at least the following disclosures prior to
the date the viatical settlement purchase agreement is signed by all parties. The disclosures shall be conspicuously displayed in any viatical settlement purchase agreement or
in a separate document signed by the viatical settlement purchaser and viatical settlement
provider or viatical settlement investment agent and shall provide at least the following
disclosures:
(1) The purchaser will receive no returns, including, but not limited to, dividends
and interest, until the insured dies;
(2) The actual annual rate of return on a viatical settlement contract is dependent
upon an accurate projection of the insured's life expectancy, and the actual date of the
insured's death. An annual guaranteed rate of return is not determinable;
(3) The viaticated life insurance contract should not be considered a liquid purchase
because it is impossible to predict the exact timing of the contract's maturity and the
funds may not be available until the death of the insured. There is no established secondary market for resale of these contracts by the purchaser;
(4) The purchaser may lose all benefits or may receive substantially reduced benefits
if the insurer goes out of business during the term of the viatical investment;
(5) The purchaser is responsible for payment of the insurance premium or other
costs related to the policy if required by the terms of the viatical settlement purchase
agreement. Such payments may reduce the purchaser's return. If a party other than the
purchaser is responsible for the payment, the name and address of that party shall be
disclosed;
(6) The purchaser is responsible for payment of the insurance premiums or other
costs related to the policy if the insured returns to good health. The amount of such
premiums shall be disclosed, if applicable;
(7) The name and address of any person providing escrow services and the person's
relationship to the broker;
(8) The amount of any trust fees or other expenses to be charged to the viatical
settlement purchaser;
(9) Whether the purchaser is entitled to a refund of all or part of the purchaser's
investment under the viatical settlement contract if the policy is later determined to be
null and void;
(10) That group policies may contain limitations or caps in the conversion rights,
additional premiums may be required to be paid if the policy is converted, the party
responsible for the payment of the additional premiums shall be named and, if a group
policy is terminated and replaced by another group policy, that there may be no right
to convert the original coverage;
(11) The risks associated with policy contestability, including, but not limited to,
the risk that the purchaser will have no claim or only a partial claim to death benefits
if the insurer rescinds the policy within the contestability period;
(12) Whether the purchaser will be the owner of the policy in addition to being the
beneficiary, and if the purchaser is the beneficiary only and not also the owner, the
special risks associated with that status, including, but not limited to, the risk that the
beneficiary may be changed or the premium may not be paid;
(13) (A) The experience and qualifications of the person who determines the life
expectancy of the insured, such as in-house staff, independent physicians and specialty
firms that weigh medical and actuarial data; (B) the information the determination of
life expectancy is based on; and (C) the relationship of the person making the determination to the viatical settlement provider, if any;
(14) Disclosure to an investor shall include distribution of a brochure, developed
or authorized by the commissioner, describing the process of investment in viatical
settlements.
(e) A viatical settlement provider or its viatical settlement investment agent shall
provide the viatical settlement purchaser with at least the following disclosures not later
than at the time of the assignment, transfer or sale of all or a portion of an insurance
policy. The disclosures shall be contained in a document signed by the viatical settlement
purchaser and viatical settlement provider or viatical settlement investment agent and
shall provide at least the following disclosures:
(1) All life expectancy certifications obtained by the provider in the process of
determining the price paid to the viator;
(2) Whether premium payments or other costs related to the policy have been escrowed. If such costs have been escrowed, disclosure is required regarding the date upon
which the escrowed funds will be depleted and whether the purchaser will be responsible
for payment of premiums after that date, and, if so, the amount of the premiums;
(3) Whether premium payments or other costs related to the policy have been
waived. If such costs have been waived, disclosure is required regarding whether the
investor will be responsible for payment of the premiums if the insurer that wrote the
policy terminates the waiver after purchase and the amount of those premiums;
(4) The type of policy offered or sold, such as, whole life, term life, universal life
or a group policy certificate, any additional benefits contained in the policy, and the
current status of the policy;
(5) If the policy is term insurance, the special risks associated with term insurance,
including, but not limited to, the purchaser's responsibility for additional premiums if
the viator continues the term policy at the end of the current term;
(6) Whether the policy is contestable;
(7) Whether the insurer that wrote the policy has any additional rights that could
negatively affect or extinguish the purchaser's rights under the viatical settlement contract, what the rights are, and under what conditions the rights are activated;
(8) The name and address of the person responsible for monitoring the insured's
condition, a description of how often the monitoring of the insured's condition is done,
how the date of death is determined, and how and when this information will be transmitted to the purchaser.
(f) The viatical settlement purchase agreement may be voided by the purchaser at
any time before the end of the third day after the disclosures required by subsections
(d) and (e) of this section are received by the purchaser.
(P.A. 97-202, S. 8, 18; P.A. 98-27, S. 13; P.A. 99-104, S. 6; P.A. 03-152, S. 6.)
History: P.A. 97-202 effective January 1, 1998; P.A. 98-27 inserted "That" at the beginning of Subdivs. (2) to (6),
inclusive; P.A. 99-104 added Subdiv. (7) re disclosure that funds will be sent to viator within two business days after
settlement, and added Subdiv. (8) re disclosure that entering into viatical settlement contract may effect other rights or
benefits and that assistance should be sought from a financial advisor; P.A. 03-152 substantially revised existing provisions
and designated same as Subsec. (a), and added Subsecs. (b) to (f), inclusive, re required disclosures.
Sec. 38a-465g. Prerequisites to a viatical settlement contract. Medical release.
Notice to insurer. Verification of coverage. Confidentiality of medical information.
Rescission. Change of ownership or beneficiary. Independent escrow agents. License required to receive fees and commissions. Proceeds not subject to state tax.
Contact with insured limited. Alienability of death benefit. Calculation of amount
payable. (a)(1) Before entering into a viatical settlement contract, a viatical settlement
provider shall obtain:
(A) If the viator is the individual whose life is insured by the viator's life insurance
policy or certificate, a written statement from a licensed physician that the viator is of
sound mind and under no undue influence to enter into the viatical settlement contract; and
(B) A witnessed document executed by the insured person in which the person
consents to the release of the person's medical records to a viatical settlement provider,
viatical settlement broker and the insurance company that issued the life insurance policy
covering the life of the insured. The consent for the release of medical records shall
only be obtained for the insurance company if the life insurance policy covering the
insured was issued within forty-eight months of the date of the viator's application for
the viatical settlement contract.
(2) Not later than twenty days after a viator executes the documents necessary to
transfer any rights under a policy or not later than twenty days after entering any
agreement, option, promise or any other form of understanding, expressed or implied,
to viaticate the policy, the viatical settlement provider shall give written notice to the
insurer that issued the policy that the policy has or will become a viaticated policy.
The notice shall be accompanied by the documents required by subdivision (3) of this
subsection.
(3) The viatical settlement provider shall deliver a copy of the medical release required under subparagraph (B) of subdivision (1) of this subsection, a copy of the viator's
application for the viatical settlement contract, the notice required under subdivision
(2) of this subsection and a request for verification of coverage to the insurer that issued
the policy that is the subject of the viatical transaction. The commissioner may adopt
regulations, in accordance with chapter 54, to prescribe the form or forms to be used
for verification of coverage.
(4) The insurer shall respond to a request for verification of coverage submitted on
an approved form by a viatical settlement provider not later than thirty calendar days
after the date the request was received and shall indicate whether, based on the medical
evidence and documents provided, the insurer intends, at the time of the response, to
pursue an investigation regarding the validity of the policy.
(5) Prior to or at the time of execution of the viatical settlement contract, the viatical
settlement provider shall obtain a witnessed document in which the viator consents
to the viatical settlement contract, represents that the viator has a full and complete
understanding of the viatical settlement contract, that the viator has a full and complete
understanding of the benefits of the life insurance policy, acknowledges that the viator
is entering into the viatical settlement contract freely and voluntarily and, for persons
with a terminal or chronic illness or condition, acknowledges that the insured has a
terminal or chronic illness and that the terminal or chronic illness or condition was
diagnosed after the life insurance policy was issued.
(6) If a viatical settlement broker performs any of the activities required of the
viatical settlement provider under this section, the provider shall be deemed to have
fulfilled the requirements of this section.
(b) All medical information solicited or obtained by any person licensed pursuant
to this part shall be subject to applicable provisions of law relating to the confidentiality
of medical information.
(c) Each viatical settlement contract entered into in this state or entered into with
residents of this state shall provide that the viator may rescind the viatical settlement
contract within fifteen days from the viator's receipt of the viatical settlement proceeds.
Such rescission shall be effective only if both notice of rescission is delivered by the
viator to the viatical settlement provider and a full return of funds to the viatical settlement provider is made before the expiration of the applicable rescission period. If the
insured dies during the rescission period, the viatical settlement contract shall be deemed
to have been rescinded, subject to repayment to the viatical settlement provider or viatical settlement purchaser of all viatical settlement proceeds, and any premiums, loans and
loan interest that has been paid by the viatical settlement provider or viatical settlement
purchaser.
(d) The viatical settlement purchaser shall have the right to rescind a viatical settlement contract until the end of the third day after the disclosures required by subsections
(d) and (e) of section 38a-465f are received by the purchaser.
(e) The viatical settlement provider shall instruct the viator to send the executed
documents required to effect the change in ownership, assignment or change in beneficiary directly to the independent escrow agent. Not later than two business days after
the date the escrow agent receives the document, or not later than two business days after
the date the viatical settlement provider receives the documents if the viator erroneously
provides the documents directly to the provider, the provider shall pay or transfer the
proceeds of the viatical settlement into an escrow or trust account maintained in a state
or federally-chartered financial institution whose deposits are insured by the Federal
Deposit Insurance Corporation. Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment or change in beneficiary forms to the viatical settlement provider or related provider
trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed
transfer of ownership, assignment or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the viator.
(f) Failure to tender consideration to the viator for the viatical settlement contract
within the time set forth in section 38a-465f shall render the viatical settlement contract
voidable by the viator for lack of consideration until the time such consideration is
tendered to, and accepted by, the viator.
(g) No viatical settlement broker shall receive from a viatical settlement provider a
fee, commission or other valuable consideration for services rendered to or in connection
with viators resident in this state unless such viatical settlement provider is licensed in
this state.
(h) Viatical settlement proceeds received by a viator from a licensed viatical settlement provider pursuant to a viatical settlement contract shall not be subject to state
taxation under title 12.
(i) Following the consummation of a viatical settlement, no person may initiate
contact with the insured under the viaticated policy for purposes of determining the
insured's health status (1) more than one time during each consecutive three-month
period following the date the viatical settlement proceeds are released to the viator if
the insured has an estimated life expectancy of more than one year from such date, or
(2) more than one time during each month following such date if the insured has an
estimated life expectancy of one year or less. The viatical settlement provider shall notify
the viator of said limitations on contacts with the insured prior to the consummation of
the viatical settlement in accordance with section 38a-465f. The limitations set forth in
this subsection shall not apply to any contacts with an insured under a viaticated policy
for reasons other than determining the insured's health status. Viatical settlement providers and viatical settlement brokers shall be responsible for the actions of their authorized
representatives.
(j) An insured shall have the right, where permitted under the life insurance policy
or certificate, to assign, transfer, sell or bequest the net death benefit payable under or
ownership of a life insurance policy or certificate for any remaining portion of such
coverage. An insured shall also have the right, where permitted under the life insurance
policy or certificate, to assign, transfer, sell or bequest the net death benefit payable
under or ownership of a life insurance policy or certificate at any time such coverage
is on disability waiver of premium.
(k) Unless otherwise agreed to in writing by the viator and the viatical settlement
provider, the amount payable to a viatical settlement provider upon the insured's death
shall be the amount (1) which would have been payable to the viatical settlement provider
if the insured had died on the first day following the date of the viatical settlement
contract, less (2) (A) any double or additional indemnity amount, if any, payable under
the viaticated policy if the insured's death is accidental, and (B) all other amounts required to be deducted from the death benefit. Any other additional amounts shall remain
payable to the beneficiary last named by the viator prior to entering into the viatical
settlement contract, or to such other beneficiary, other than the viatical settlement provider, as the viator may designate after entering into the viatical settlement contract, or
in the absence of a designation, to the estate of the viator.
(P.A. 97-202, S. 9, 18; P.A. 99-145, S. 9, 10, 23; P.A. 03-152, S. 7.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 amended Subsecs. (d) and (h) to delete references to
Subsec. (a) of Sec. 38a-11 and Subdiv. (19) of Sec. 38a-816, effective June 8, 1999; P.A. 03-152 amended Subsec. (a) by
redesignating existing Subdivs. (1) and (2) as Subdiv. (1)(A) and (B), rewriting Subdiv. (1)(B) re required consent forms,
deleting former Subdiv. (3) re witnessed document and adding new Subdivs. (2) to (6) re notice, copies of documents,
verification of coverage, witnessed documents, and deemed fulfillment of requirements of section, added new Subsec. (b)
re confidentiality of medical information, redesignated existing Subsec. (b) as new Subsec. (c) and added provision therein
re death of the insured during the rescission period, added new Subsec. (d) re purchaser's right to rescind, added new
Subsec. (e) re sending executed documents to independent escrow agent, added new Subsec. (f) re voidability of contract
for failure to tender consideration, deleted former Subsecs. (c), (d) and (h) re deposit of documents, voiding of contract if
proceeds not received and limit on commissioner's authority to determine the amount paid re contract, redesignated existing
Subsecs. (e), (f), (g), (i) and (j) as new Subsecs. (g), (h), (i), (j) and (k), respectively, amended new Subsec. (g) to delete
"or viatical settlement agent", amended new Subsec. (i) to reference Sec. 38a-465f and provide that viatical settlement
providers and brokers be responsible for the actions of their authorized representatives, and made technical changes.
Sec. 38a-465h. Policy investors prohibited from influencing insured's medical
treatment. Assignment of rights under life insurance policy. Rights of assignee.
Conversion period tolled, when. Calculation of incontestability period following
conversion of group policy to individual policy. (a) No person who invests in a viaticated policy, including, but not limited to, a participant in a financing transaction, may
influence the treatment of the insured's illness.
(b) (1) No life insurance policy or certificate issued or delivered in this state which
permits assignment may in any way restrict the owner of the policy or holder of the
certificate from making an assignment of rights under said contract or certificate as a
gift without consideration.
(2) Any provision in any life insurance policy or certificate which places restrictions
on assignments described in subdivision (1) of this subsection may be waived with
written consent from the administrator or insurer of such policy or certificate.
(c) The assignee of an individual life insurance policy or of rights under a certificate
shall have all rights at law or in equity held by the assignor under such policy or certificate, including, but not limited to, the right to: (1) Convert the coverage evidenced by
the certificate to an individual policy; (2) receive timely notice of such right to convert;
(3) take such other action as may be necessary under the policy or certificate in order
to preserve the value of the assigned coverage; (4) receive information concerning the
coverage under the policy or certificate; (5) receive notice of a lapse or discontinuation
of coverage; (6) exercise any option relating to the assigned coverage during an open
enrollment period; and (7) all such other rights and privileges vested in the assignor
under the terms of the policy or certificate.
(d) If a certificate is assigned pursuant to a viatical settlement contract and the
administrator of the group life insurance policy to which the certificate relates fails to
give notice to the viatical settlement provider that the insured is no longer a covered
person under the group life insurance policy or of the right to convert the certificate to
an individual life insurance policy, the period of time during which the viatical settlement
provider may apply for conversion under the terms of the group life insurance policy
shall begin from the date such notice is received by the viatical settlement provider.
(e) If a certificate acquired pursuant to a viatical settlement contract is converted
to an individual life insurance policy, where permitted under the life insurance policy
or certificate and when the face amount does not exceed the original group coverage,
for the purposes of measuring the period of incontestability or determining application
of the suicide exclusion, the date of issue of the policy shall be the first day coverage
was provided under the group life insurance policy to which the certificate related and
not the date of issue of the individual life insurance policy issued following conversion,
provided the information relevant to the determination of eligibility of conversion can
be contested.
(P.A. 97-202, S. 10, 18.)
History: P.A. 97-202 effective January 1, 1998.
Sec. 38a-465i. Life insurance company to respond to requests for certain information. Issuance of individual conversion policy for purpose of entering into viatical settlement contract. Construction. Prohibition on certain contracts within two
years of life policy issuance. Deemed compliance. Timely response to transfer request. (a) Each life insurance company licensed in this state shall promptly respond to
reasonable requests for policy or certificate information following the receipt of the
following documents by the insurer or its agent:
(1) An instruction executed by the viator requiring the insurer to release specified
information regarding the policy or certificate to a named viatical settlement provider
or viatical settlement broker; and
(2) A written request for such information from the named viatical settlement provider or viatical settlement broker.
(b) Requests for the following items are deemed to be reasonable: (1) Ownership
of and death benefits payable under the viaticated policy; (2) premium information on the
viaticated policy; (3) liens on and assignments and additional benefits of the viaticated
policy; (4) waiver of premium of the viaticated policy; and (5) ownership of and assignment provisions under the viaticated policy. The commissioner may adopt regulations,
in accordance with chapter 54, to identify additional requests for information which
shall also be deemed reasonable.
(c) An insurer or third party administrator of a group life insurance policy shall
promptly issue an individual conversion policy if the conversion is being requested for
the purpose of entering into a viatical settlement contract.
(d) Nothing in this section shall be construed to prohibit a policy owner or certificate
holder, pursuant to the provisions of the policy or certificate, from assigning rights or
benefits under the policy or certificate to a viatical settlement provider or from converting such coverage to an individual life insurance policy.
(e) No person may enter into a viatical settlement contract within a two-year period
from the date of issuance of an insurance policy or certificate unless the viator certifies
to the viatical settlement provider that one or more of the following conditions have
been met within the two-year period:
(1) The policy was issued upon the viator's exercise of conversion rights arising
out of a group or individual policy, provided the total of the time covered under the
conversion policy plus the time covered under the prior policy is at least twenty-four
months. The time covered under a group policy shall be calculated without regard to
any change in insurance carriers, provided the coverage has been continuous and under
the same group sponsorship;
(2) (A) The viator submits independent evidence to the viatical settlement provider
that one or more of the following conditions have been met within the two-year period:
(i) The viator or insured is terminally or chronically ill; or
(ii) The viator disposes of the viator's entire ownership interests in a closely held
corporation pursuant to the terms of a buyout or other similar agreement in effect at the
time the insurance policy was initially issued;
(B) Copies of the independent evidence described in subparagraph (A) of this subdivision and documents required by subsection (a) of section 38a-465g shall be submitted
to the insurer when the viatical settlement provider submits a request to the insurer for
verification of coverage. The copies shall be accompanied by a letter from the viatical
settlement provider that the copies are true and correct copies of the documents received
by the viatical settlement provider.
(f) If the viatical settlement provider submits to the insurer a copy of the owner or
insured's certification described in subdivision (2) of subsection (e) of this section when
the provider submits a request to the insurer to effect the transfer of the policy or certificate to the viatical settlement provider, the copy shall be deemed to conclusively establish that the viatical settlement contract satisfies the requirements of this section and
the insurer shall timely respond to the request.
(P.A. 97-202, S. 11, 18; P.A. 03-152, S. 8.)
History: P.A. 97-202 effective January 1, 1998; P.A. 03-152 deleted references to "viatical settlement agent" in Subsec.
(a)(1) and (2), deleted "the provisions of" re chapter 54 in Subsec. (b), made technical changes in Subsecs. (b) and (d),
added Subsec. (e) re contracts entered into within two-year period from date of issuance of policy, and added Subsec. (f)
re satisfaction of requirements of section and the insurer's timely response to a request to transfer policy or certificate
(Revisor's note: A semicolon at the end of Subsec. (e) was replaced editorially by the Revisors with a period for proper form).
Sec. 38a-465j. Construction re licensing, fees, commissions and financing
transactions. (a) Nothing in sections 38a-465 to 38a-465m, inclusive, shall be construed
to require a financing entity to obtain a viatical settlement provider license or viatical
settlement broker license pursuant to section 38a-465a.
(b) Nothing in sections 38a-465 to 38a-465m, inclusive, shall be construed to restrict
any person from receiving a fee, commission or other valuable consideration for services
rendered in connection with any financing transaction.
(c) Nothing in sections 38a-465 to 38a-465m, inclusive, shall be construed to require
notice to the commissioner of, or restrict an insurance company from investing or participating in or purchasing any securities issued in, any financing transaction.
(P.A. 97-202, S. 12, 18; P.A. 99-145, S. 11, 23.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 deleted references to Subsec. (a) of Sec. 38a-11 and Subdiv.
(19) of Sec. 38a-816, effective June 8, 1999.
Sec. 38a-465k. Limits on alienability of viaticated policies. No viatical settlement provider may sell, assign, transfer or pledge a viaticated policy except to a viatical
settlement provider licensed pursuant to section 38a-465a, or a person not required to
be licensed under sections 38a-465 to 38a-465m, inclusive.
(P.A. 97-202, S. 14, 18; P.A. 99-145, S. 12, 23.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 deleted references to Subsec. (a) of Sec. 38a-11 and Subdiv.
(19) of Sec. 38a-816, effective June 8, 1999.
Sec. 38a-465l. Viatical settlement providers and brokers acting prior to January 1, 1998. Any viatical settlement provider or viatical settlement broker who is acting
in such capacity in this state as of January 1, 1998, may continue to operate in such
capacity pending approval or disapproval of such provider's or broker's application
for a license pursuant to section 38a-465a, provided such application is filed with the
commissioner not later than thirty days after January 1, 1998.
(P.A. 97-202, S. 15, 18.)
History: P.A. 97-202 effective January 1, 1998.
Sec. 38a-465m. Regulations. Imposition of bond or other mechanism as proof
of financial accountability. (a) The commissioner may adopt regulations, in accordance
with the provisions of chapter 54, to implement the provisions of sections 38a-465 to
38a-465l, inclusive, and sections 38a-465n to 38a-465q, inclusive.
(b) Such regulations may establish standards for evaluating reasonableness of payments under viatical settlement contracts for persons who are terminally or chronically
ill. Such regulations may include, but are not limited to, the regulation of discount rates
used to determine the amount paid in exchange for assignment, transfer, sale, devise or
bequest of a benefit under a life insurance policy.
(c) Such regulations may establish appropriate licensing requirements and standards for continued licensure for viatical settlement providers, viatical settlement brokers and viatical settlement investment agents.
(d) The commissioner may require a bond or other mechanism for financial accountability for viatical settlement providers and brokers.
(e) Such regulations may adopt rules governing the relationship and responsibilities
of both insurers and viatical settlement providers, viatical settlement brokers and viatical
settlement investment agents during the viatication of a life insurance policy or certificate.
(P.A. 97-202, S. 16, 18; P.A. 99-145, S. 13, 23; P.A. 03-152, S. 9.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 deleted references to Subsec. (a) of Sec. 38a-11 and Subdiv.
(19) of Sec. 38a-816, effective June 8, 1999; P.A. 03-152 designated existing provisions as Subsec. (a), added reference
therein to Secs. 38a-465n to 38a-465q re regulations, and added Subsecs. (b) to (e), inclusive, re scope of regulations and
re bond or other mechanism for financial accountability.
Sec. 38a-465n. Viatical settlement advertisements. (a) This section shall apply
to the advertising of viatical settlement contracts, viatical settlement purchase
agreements or related products or services. Where disclosure requirements are established pursuant to federal law, this section shall be interpreted to minimize or eliminate
conflict with the federal law.
(b) Each person licensed pursuant to this part shall establish and at all times maintain
a system of control over the content, form and method of dissemination of all advertisements of its contracts, products and services. Each advertisement, regardless of by whom
written, created, designed or presented, shall be the responsibility of the viatical settlement licensee, as well as the individual who created or presented the advertisement. A
system of control shall include regular routine notification, at least once a year, to agents
and others authorized by the licensee who disseminate advertisements of the requirements and procedures for approval prior to the use of any advertisements not furnished
by the licensee.
(c) Advertisements shall be truthful and not misleading in fact or by implication.
The form and content of an advertisement of a viatical settlement contract or viatical
settlement purchase agreement, product or service shall be sufficiently complete and
clear so as to avoid deception. The advertisement shall not have the capacity or tendency
to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead
or deceive shall be determined by the commissioner from the overall impression that
the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
(d) Certain viatical settlement advertisements are deemed false and misleading on
their face and are prohibited. False and misleading viatical settlement advertisements
include, but are not limited to, advertisements that include the following representations:
(1) "Guaranteed", "fully secured", "100 per cent secured", "fully insured", "secure", "safe", "backed by rated insurance companies", "backed by federal law", "backed
by state law", "state guaranty funds" or similar representations;
(2) "No risk", "minimal risk", "low risk", "no speculation", "no fluctuation" or
similar representations;
(3) Qualified or approved for individual retirement accounts, Roth IRAs, 401(k)
plans, simplified employee pensions, 403(b) plans, Keogh plans, TSA or other retirement account rollovers, "tax deferred" or similar representations;
(4) Utilization of the word "guaranteed" to describe the fixed return, annual return,
principal, earnings, profits, investment or similar representations;
(5) "No sales charges or fees" or similar representations;
(6) "High yield", "superior return", "excellent return", "high return", "quick profit"
or similar representations;
(7) Purported favorable representations or testimonials about the benefits of viatical
settlement contracts or viatical settlement purchase agreements as an investment, taken
out of context from newspapers, trade papers, journals, radio and television programs,
and all other forms of print or electronic media.
(e) The information required to be disclosed under this section shall not be minimized, rendered obscure or presented in an ambiguous fashion or intermingled with the
text of the advertisement so as to be confusing or misleading. An advertisement shall not:
(1) Omit material information or use words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency or effect of misleading or
deceiving viators, purchasers or prospective purchasers as to the nature or extent of any
benefit, loss covered, premium payable, or state or federal tax consequence. The fact
that the viatical settlement contract or viatical settlement purchase agreement offered
is made available for inspection prior to consummation of the sale, or an offer is made
to refund the payment if the viator is not satisfied or that the viatical settlement contract
or viatical settlement purchase agreement includes a "free look" period that satisfies or
exceeds legal requirements shall not remedy misleading statements;
(2) Use the name or title of a life insurance company or a life insurance policy unless
the advertisement has been approved by the insurance company;
(3) Represent that premium payments will not be required to be paid on the life
insurance policy that is the subject of a viatical settlement contract or viatical settlement
purchase agreement in order to maintain that policy unless that is the fact;
(4) State or imply that interest charged on an accelerated death benefit or a policy
loan is unfair, inequitable or in any manner an incorrect or improper practice;
(5) Include the words "free", "no cost", "without cost", "no additional cost", "at no
extra cost" or words of similar meaning with respect to any benefit or service unless
true. An advertisement may specify the charge for a benefit or a service or may state
that a charge is included in the payment or use other appropriate language;
(6) Include testimonials, appraisals or analysis that are not genuine. Testimonials,
appraisals and analysis shall (A) represent the current opinion of the author; (B) be
applicable to the viatical settlement contract or viatical settlement purchase agreement,
product or service advertised, if any; and (C) be accurately reproduced with sufficient
completeness to avoid misleading or deceiving prospective viators or purchasers as to
the nature or scope of the testimonials, appraisals, analysis or endorsement. In using
testimonials, appraisals or analysis, the licensee makes as its own all the statements
contained therein, and the statements shall be subject to the provisions of this subdivision.
(i) If the individual making a testimonial, appraisal, analysis or an endorsement has
a financial interest in the viatical settlement provider or related entity as a stockholder,
director, officer, employee or otherwise, or receives any benefit directly or indirectly
other than required union scale wages, that fact shall be prominently disclosed in the
advertisement.
(ii) An advertisement shall not state or imply that a viatical settlement contract or
viatical settlement purchase agreement, benefit or service has been approved or endorsed
by a group of individuals, society, association or other organization unless that is the
fact and unless any relationship between an organization and the viatical settlement
licensee is disclosed. If the entity making the endorsement or testimonial is owned,
controlled or managed by the viatical settlement licensee, or receives any payment or
other consideration from the viatical settlement licensee for making an endorsement or
testimonial, that fact shall be disclosed in the advertisement.
(iii) When an endorsement refers to benefits received under a viatical settlement
contract or viatical settlement purchase agreement all pertinent information shall be
retained for a period of five years after its use.
(f) An advertisement shall not contain statistical information unless the information
accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.
(g) An advertisement shall not disparage insurers, viatical settlement providers,
viatical settlement brokers, viatical settlement investment agents, insurance producers,
policies, services or methods of marketing.
(h) The name of the licensee shall be clearly identified in all advertisements about
the licensee or its viatical settlement contract or viatical settlement purchase agreements,
products or services, and if any specific viatical settlement contract or viatical settlement
purchase agreement is advertised, the viatical settlement contract or viatical settlement
purchase agreement shall be identified either by form number or some other appropriate
description. If an application is part of the advertisement, the name of the viatical settlement provider shall be shown on the application.
(i) An advertisement shall not use a trade name, group designation, name of the
parent company of a licensee, name of a particular division of the licensee, service mark,
slogan, symbol or other device or reference without disclosing the name of the licensee,
if the advertisement would have the capacity or tendency to mislead or deceive as to
the true identity of the licensee, or to create the impression that a company other than
the licensee would have any responsibility for the financial obligation under a viatical
settlement contract or viatical settlement purchase agreement.
(j) An advertisement shall not use any combination of words, symbols or physical
materials that by their content, phraseology, shape, color or other characteristics are so
similar to a combination of words, symbols or physical materials used by a government
program or agency or otherwise appear to be of such a nature that they tend to mislead
prospective viators or purchasers into believing that the solicitation is in some manner
connected with a government program or agency.
(k) An advertisement may state that a licensee is licensed in the state where the
advertisement appears, provided it does not exaggerate that fact or suggest or imply that
competing licensees may not be so licensed. The advertisement may ask the audience
to consult the licensee's web site or contact the Insurance Department to find out if
the state requires licensing and, if so, whether the viatical settlement provider, viatical
settlement broker or viatical settlement investment agent is licensed.
(l) An advertisement shall not create the impression that the viatical settlement
provider, its financial condition or status, the payment of its claims or the merits, desirability, or advisability of its viatical settlement contracts or viatical settlement purchase
agreement forms are recommended or endorsed by any government entity.
(m) The name of the licensee shall be stated in all of the licensee's advertisements.
An advertisement shall not use a trade name, any group designation, name of any affiliate
or controlling entity of the licensee, service mark, slogan, symbol or other device in a
manner that would have the capacity or tendency to mislead or deceive as to the true
identity of the licensee or create the false impression that an affiliate or controlling entity
would have any responsibility for the financial obligation of the licensee.
(n) An advertisement shall not directly or indirectly create the impression that any
division or agency of the state or of the United States government endorses, approves
or favors:
(1) Any licensee or its business practices or methods of operation;
(2) The merits, desirability or advisability of any viatical settlement contract or
viatical settlement purchase agreement;
(3) Any viatical settlement contract or viatical settlement purchase agreement; or
(4) Any life insurance policy or life insurance company.
(o) If the advertisement emphasizes the speed with which the viatication will occur,
the advertisement shall disclose the average time frame from completed application to
the date of offer and from acceptance of the offer to receipt of the funds by the viator.
(p) If the advertisement emphasizes the dollar amounts available to viators, the
advertisement shall disclose the average purchase price as a per cent of face value obtained by viators contracting with the licensee during the past six months.
(P.A. 03-152, S. 12.)