BILL NUMBER: SB 590 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 31, 2011
INTRODUCED BY Senator Calderon
FEBRUARY 17, 2011
An act to amend Sections 789.10 and 10127.7 of the Insurance Code,
relating to life insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 590, as amended, Calderon. Life insurance.
(1) Existing law regulates the sale of life insurance to seniors,
including annuities, as specified. Existing law requires a person who
meets with a senior in the senior's home regarding the sale of life
insurance to deliver a notice in writing to the senior no less than
24 hours prior to that individual's meeting, and to abide by other
restrictions regarding contacting the senior in the senior's home.
This bill would specify that the above notice could be provided at
the time of the meeting in the senior's home and that the other
provisions do not apply if the meeting concerns the sale of life
insurance designated by the purchaser as payment for funeral and
burial expenses, the life insurance policy has an initial face amount
of $15,000 or less, the policy provides a "free look" period in
which the purchaser has 60 days to cancel the policy and be refunded
payments made, and the seller is licensed, as specified. The bill
would require the issuer of one of these policies exempted from the
provisions requiring 24-hour advance notice and related requirements
to provide a written notice of the purchase and the 60-day right of
cancellation with specified content to the senior and certain other
persons, except as specified.
(2) Existing law provides that life insurance policies with a face
value of less than $10,000, issued after July 1, 1974, shall contain
a notice permitting the return of the policy within a period of time
designated in the notice, which may not be less than 10 or
days nor more than 30 days.
This bill would provide that a life insurance policy with a face
value of $15,000 or less, issued after January 1, 2012, shall contain
a notice permitting the return of the policy within not less than 10
days nor more than 30 days, provided that for a policy relating to
funeral and burial expenses described in (1) above, if certain notice
requirements are not met, the right of return shall last 60 days.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 789.10 of the Insurance Code is amended to
read:
789.10. (a) This section applies to the sale, offering for sale,
or generation of leads for the sale of life insurance, including
annuities, to senior insureds or prospective insureds by any person.
(b) Except as provided in subdivision (i), any person who meets
with a senior in the senior's home is required to deliver a notice in
writing to the senior no less than 24 hours prior to that individual'
s initial meeting in the senior's home. If the senior has an existing
insurance relationship with an agent and requests a meeting with the
agent in the senior's home the same day, a notice shall be delivered
to the senior prior to the meeting. The notice shall be in
substantially the following form, with the appropriate information
inserted, in 14-point type:
"(1) During this visit or a followup visit, you will be given a
sales presentation on the following indicate all that apply]:
( ) Life insurance, including annuities
( ) Other insurance products specify]: _________________.
(2) You have the right to have other persons present at the
meeting, including family members, financial advisors , or
attorneys.
(3) You have the right to end the meeting at any time.
(4) You have the right to contact the Department of Insurance for
information, or to file a complaint. The notice shall include the
consumer assistance telephone numbers at the department]
(5) The following individuals will be coming to your home: list
all attendees, and insurance license information, if applicable]"
(c) Upon contacting the senior in the senior's home, the person
shall, before making any statement other than a greeting, or asking
the senior any other questions, state that the purpose of the contact
is to talk about insurance, or to gather information for a followup
visit to sell insurance, if that is the case, and state all of the
following information:
(1) The name names and titles of all
persons arriving at the senior's home.
(2) The name of the insurer represented by the person, if known.
(d) Each person attending a meeting with a senior shall provide
the senior with a business card or other written identification
stating the person's name, business address, telephone number, and
any insurance license number.
(e) The persons attending a meeting with a senior shall end all
discussions and leave the home of the senior immediately after being
asked to leave by the senior.
(f) A person may not solicit a sale or order for the sale of an
annuity or life insurance policy at the residence of a senior, in
person or by telephone, by using any plan, scheme, or ruse that
misrepresents the true status or mission of the contact.
(g) This section shall not apply to the sale of life insurance
policies of the type described in subdivision (c) of Section 1676
that are designated by the purchaser as payment for funeral and
burial expenses if the life insurance policy meets both of the
following:
(1) Has an initial face amount of fifteen thousand dollars
($15,000) or less.
(2) Provides a "free look" period in which the purchaser has 60
days to cancel the policy and be refunded payments made to the
insurer prior to the cancellation of the policy.
(h) (1) Within 14 days of the purchase of a policy exempt from
application of this section pursuant to subdivision (g), the issuer
shall provide by first-class mail written notice of the purchase and
the 60-day right of cancellation to the senior, any family member
designated by the senior, and any financial, estate planning, or
other advisor of the senior's choosing at addresses provided by the
senior. The notice shall include all of the following:
(A) Information on the right of cancellation.
(B) A statement that the recipient of the notice is authorized to
call the insurer to inquire about the policy on behalf of the
policyholder.
(C) A form suitable for the senior's use in exercising the right
to cancel the policy.
(D) Information on how to contact the department for information
or to file a complaint, including the telephone number of the
department's customer assistance office.
(2) The department may adopt, by regulation, a standardized form
for use in complying with the requirements of paragraph (1).
(i) The notice requirement in subdivision (b) shall be deemed
satisfied with respect to a policy exempt from application of this
section pursuant to subdivision (g) if both of the following
requirements are met:
(1) The notice was provided to the prospective purchaser by a
licensee subject to subdivision (c) of Section 1676 at the time of
the meeting in the prospective purchaser's home regarding the
purchase of funeral and burial expense policies.
(2) The licensee retains in his or her files a copy of the notice
signed by the purchaser.
SEC. 2. Section 10127.7 of the Insurance Code is amended to read:
10127.7. (a) Every policy of individual life insurance with an
initial face value of fifteen thousand dollars ($15,000) or less that
is delivered or issued for delivery in this state on and after
January 1, 2012, shall have printed thereon or attached thereto a
notice stating that, after receipt of the policy by the owner, the
policy may be returned by the owner for cancellation by delivering it
or mailing it to the insurer or to the agent through whom it was
purchased.
(b) The period of time set forth by the insurer for return of the
policy by the insured shall be clearly stated on the notice and,
except as provided in subdivision (c), this period shall be not less
than 10 days nor more than 30 days.
(c) The period of time to return a life insurance policy of the
type described in subdivision (g) of Section 789.10 shall be 60 days
unless the 24-hour notice specified in subdivision (b) of Section
789.10 is provided.
(d) The insured may return the policy to the insurer at any time
during the period specified in the notice. This delivery or mailing
of the policy by the owner shall void the policy from the beginning,
and the parties shall be in the same position as if no policy or
contract had been issued. All premiums paid and any policy fee paid
for the policy shall be refunded to the owner within 30 days from the
date that the insurer is notified that the insured has canceled the
policy.
(e) Except as provided in subdivision (a), this section applies
to all policies issued, amended, or delivered in this state on or
after January 1, 2011, and applies to any renewal thereof. All
policies subject to this section that are in effect on January 1,
2011, shall be construed to be in compliance with this section, and
any provision in such a policy that is in conflict with this section
shall be of no force or effect.
(f) This section does not apply to individual life insurance
policies issued in connection with a credit transaction or issued
under a contractual policy change or conversion privilege provision
contained in a policy.