S2948

An Act concerning the processing of certain requests regarding annuities and amending and supplementing P.L.2008, c.88.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.2008, c.88 (C.17B:25-35) is amended to read as follows:

2. As used in this act, except as otherwise specified:

"Annuity" means an annuity as defined by N.J.S.17B:17-5 directly solicited to a consumer.

“Annuitize” means converting a matured annuity into a series of guaranteed income payments, with a duration based upon a payout option chosen by the owner.

"Consumer" means a natural person who resides in this State.

"Deferred annuity" means an annuity with the first income payment due no earlier than one year from the date of issue and the annuity is not an immediate annuity.

"Determinable element" means a benefit, value, credit, or charge under an annuity that is guaranteed at issue, but its amount is not determined until after issue.

"Direct-response solicitation" means a solicitation solely through mail, telephone, the Internet, or other mass communication media.

"Fixed annuity" means an annuity under which the charges and other considerations provided for the annuity, less any amount charged against these considerations, earns interest at a rate: (1) set by the insurer; or (2) in a manner specified in the annuity, which manner may include, but is not limited to, the use of a stock market or other outside index.

"Generic name" means a short title which is descriptive of the charges and benefit patterns of an annuity, or endorsement or rider to the annuity.

"Guaranteed element" means a benefit, value, credit, or charge under an annuity that is guaranteed and the amount determined at issue.

"Immediate annuity" means an annuity with the first income payment due not more than 13 months from the date of issue.

"Insurer" means any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person licensed to engage in the business of insurance in this State.

"Insurance producer" means a person licensed to sell, solicit, or negotiate insurance pursuant to the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et al.).

"Negotiate" means the act of conferring directly with or offering advice directly to a consumer as the purchaser or prospective purchaser of a particular annuity concerning any of the substantive benefits, terms or conditions of the annuity, provided that the person engaged in that act either: sells annuities or obtains annuities from insurers for purchasers.

"Non-guaranteed element" means a benefit, value, credit, or charge under an annuity that is not guaranteed and the amount not determined at issue.

"Owner" means the person to whom an annuity is presently or prospectively payable by the terms of the annuity, except when the annuity declares some other person to be the owner thereof, or the individual certificate holder in the case of a group annuity.

"Sell" means to exchange an annuity by any means, for money or its equivalent, on behalf of an insurer.

"Solicit" means attempting to sell an annuity or asking or urging a consumer to apply for a particular annuity from a particular insurer.

“Surrender” means the cancellation and complete withdrawal of funds from an annuity before the end of the annuity term. The term “surrender” shall also include the partial withdrawal of funds from an annuity before the end of an annuity term.

"Variable annuity" means an annuity under which the insurer invests, for the annuity owner, the charges and other considerations provided for the annuity, less any amount charged against these considerations, into a separate account, based upon the annuity owner's stated level of investment risk, and which annuity may lose some or all of the owner's investment.

(cf: P.L.2008, c.88, s.2)

2. (New section) An annuity negotiated or sold to a consumer, except for an annuity excluded pursuant to the provisions of section 5 of P.L.2008, c.88 (C.17B:25-38), shall not be delivered, issued, executed, or renewed in this State or approved for issuance or renewal in this State by the commissioner, unless the annuity includes a provision stating:

(1) that the owner shall have 90 calendar days from the maturity date of the annuity to submit a request to the insurer to annuitize the annuity, if the annuity additionally contains a provision allowing it to automatically renew after a certain period of time; and

(2) that the insurer will disburse the annuity’s funds to the owner within 10 business days of receiving a request by the owner to surrender the annuity.

3. (New section) a. An annuity negotiated or sold to a consumer, except for an annuity excluded pursuant to the provisions of section 5 of P.L.2008, c.88 (C.17B:25-38), shall not be delivered, issued, executed, or renewed in this State or approved for issuance or renewal in this State by the commissioner, unless the annuity provides an option to:

(1) electronically disburse funds from the annuity to the owner, if the owner submits a request to the insurer to surrender or annuitize the annuity; and

(2) allow the owner to submit a request to surrender or annuitize the annuity with a signature guarantee issued by a State or federally chartered bank.

b. When a request from an owner is received by an insurer to surrender or annuitize an annuity, the insurer shall provide the owner with a phone number and email address of a representative that the owner may contact to inquire about the status of the request.

4. (New section) Except for an annuity excluded pursuant to the provisions of section 5 of P.L.2008, c.88 (C.17B:25-38), an insurer shall ensure that any interest being earned on an annuity shall continue to be earned after a request is received from the owner to surrender or annuitize the annuity.

5. This act shall take effect on the 90th day next following enactment.

STATEMENT

This bill establishes requirements regarding the processing of requests to surrender or annuitize matured annuities.

Under the bill, an annuity negotiated or sold to a consumer, with certain exceptions, will not be delivered, issued, executed, or renewed in this State unless the annuity includes a provision stating:

(1) that an insurer will disburse the annuity’s funds to the owner within 10 business days of receiving a request by the owner to surrender the annuity; and

(2) that the owner will have 90 calendar days from the annuity’s maturity date to submit a request to annuitize the annuity, if the annuity also contains a provision allowing it to automatically renew after a certain period of time.

Additionally, the bill provides that an annuity negotiated or sold to a consumer, with certain exceptions, will not be delivered, issued, executed, or renewed in this State unless the annuity includes an option to:

(1) electronically disburse funds from the annuity to the owner, if the owner submits a request to the insurer to surrender or annuitize the annuity; and

(2) provide an option for the owner to submit a request to surrender or annuitize the annuity to the insurer with a signature guarantee issued by a State or federally chartered bank.

Further, the bill provides that an insurer must ensure that any interest being earned on an annuity will continue to be earned after a request is received from the owner to surrender or annuitize the matured annuity. The bill also requires an insurer to provide the owner of an annuity with a phone number and email address of a representative that the owner may contact to inquire about the status of their request to surrender or annuitize their matured annuity.