The following provides details on new life insurance disclosure requirements regarding how death benefits are administered.
Statement from NCOIL website: "Seeking to provide consumers with needed disclosure on death benefit proceeds, insurance legislators today unanimously approved a Beneficiaries' Bill of Rights. The model addresses the insurer practice of holding claims payments through retained asset accounts (RAAs), which recently drew media attention and subsequent regulatory scrutiny."
Model co-sponsor and National Conference of Insurance Legislators (NCOIL) President Robert Damron (KY) stated the reasoning behind the creation of the Bill of Rights, "Upon hearing of the plight of beneficiaries of military death benefits, NCOIL moved swiftly to develop a model to require appropriate disclosure. I believe that the families of our fallen heroes in their time of need will benefit from these strong disclosures in the NCOIL model when the legislation is passed by the states. They deserve no less from a grateful nation for their sacrifice."
What Does this Mean:
The model requires insurers to set extensive written disclosures to consumers about RAA features when payment options other than a lump-sum payment are offered--including that beneficiaries can access the entire proceeds by cashing a single check. Required disclosures would also include any interest rates, fees, limitations and delays tied to the account, and whether or not the benefits have available Federal Deposit Insurance Corporation (FDIC) coverage, among other items.
There are also reporting requirements of RAA accounts and transfers in the model that insurers will need to adhere to going forward.
Analysis:
This seems to be a very consumer-friendly and needed provision, but what are the requirements impact upon insurers, agents, etc? What reporting measures are mandated? That is not yet clear and the details will be very important as this does seem to add more requirements upon insurers and the agents regarding the disclosure requirements.
For active life agents and brokers- how do you see these requirements specifically taking shape in the field?
Comments