BILL NUMBER: AB 2465	CHAPTERED  09/27/08

	CHAPTER  463
	FILED WITH SECRETARY OF STATE  SEPTEMBER 27, 2008
	APPROVED BY GOVERNOR  SEPTEMBER 27, 2008
	PASSED THE SENATE  AUGUST 5, 2008
	PASSED THE ASSEMBLY  MAY 22, 2008
	AMENDED IN ASSEMBLY  APRIL 10, 2008

INTRODUCED BY   Assembly Member Duvall

                        FEBRUARY 21, 2008

   An act to amend Section 10509.3 of the Insurance Code, relating to
insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2465, Duvall. Insurance: replacement of life and annuity
policies.
   Existing law regulates the replacement of life insurance and
annuity policies. Specified types of life and annuity products and
transactions are exempt from the requirements and prohibitions in
existing law, including an application to the existing insurer that
issued the existing life insurance when a contractual change or a
conversion privilege is being exercised.
   This bill would add to the transactions exempt from the regulation
of insurance and annuity policies an application to the existing
insurer that issued the existing life insurance, or when a term
conversion privilege, as defined, is exercised among corporate
affiliates.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10509.3 of the Insurance Code is amended to
read:
   10509.3.  (a) Unless otherwise specifically included, this article
does not apply to the following:
   (1) Credit life insurance.
   (2) Group life insurance or group annuities.
   (3) An application to the existing insurer that issued the
existing life insurance when a contractual change or a conversion
privilege is being exercised, or when a term conversion privilege is
exercised among corporate affiliates.
   (4) Proposed life insurance that is to replace life insurance
under a binding or conditional receipt issued by the same insurer.
   (5) Transactions where the replacing insurer and the existing
insurer are the same; provided, however, that agents proposing
replacement shall:
   (A) Comply with the requirements of subdivisions (a) and (d) of
Section 10509.4.
   (B) Provide and leave with the applicant a written statement
containing information relating to premiums, cash values, death
benefits, and outstanding indebtedness, and dividends and dividend
accumulations, if any, for the existing policy, both immediately
before and after replacement, and for the proposed life insurance or
annuity.
   (b) Registered contracts shall be exempt from the requirements of
paragraphs (2) and (3) of subdivision (b) of Section 10509.6
requiring provision of policy summary or ledger statement
information; however, premium or contract contribution amounts and
identification of the appropriate prospectus or offering circular
shall be required in lieu thereof.
   (c) "Term conversion privilege" means an option afforded by
contract to certain holders of term life insurance policies that
permits the policy to be converted into permanent insurance,
including whole life insurance, universal life insurance, or variable
life insurance, regardless of the insured's physical condition and
without a medical examination. The holder of a term life insurance
policy with a term conversion privilege shall not be denied coverage
or charged an additional premium for any health problems and premiums
for the permanent policy shall be based on the same underwriting
class as the term policy, regardless of any changes of health since
the term policy was issued.
   (d) "Corporate affiliate" means the same as "affiliate" as defined
in Section 1215.