SB 426, as introduced, Leyva. Annuities: cash surrender benefits.
Existing law governs annuities and, for those insurance contracts that provide cash surrender benefits, prescribes the cash surrender benefit available prior to maturity. Existing law also requires the death benefit under these contracts to be at least equal to the cash surrender benefit.
This bill would instead require the death benefit payable under contracts issued to persons 65 years of age or older to be at least equal to the annuity value or accumulation value without any surrender charges or penalties upon death.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 10168.4 of the Insurance Code is
2amended to read:
For contracts which provide cash surrender benefits,
4begin delete suchend deletebegin insert theend insert cash surrender benefits available prior to maturity shall
5not be less than the present value as of the date of surrender of that
6portion of the maturity value of the paid-up annuity benefit which
7would be provided under the contract at maturity arising from
8considerations paid prior to the time of cash surrender reduced by
9the amount appropriate to reflect any prior withdrawals from or
P2 1partial surrenders of the contract,begin delete suchend deletebegin insert
theend insert
present value being
2calculated on the basis of an interest rate not more than 1 percent
3higher than the interest rate specified in the contract for
4accumulating the net considerations to determinebegin delete suchend deletebegin insert theend insert maturity
5value, decreased by the amount of any indebtedness to the company
6on the contract, including interest due and accrued, and increased
7by any existing additional amounts credited by the company to the
8contract.begin delete In no event shall anyend deletebegin insert Theend insert cash surrender benefitbegin insert shall notend insert
9 be less than the minimum
nonforfeiture amount at that time. The
10death benefit underbegin delete suchend deletebegin insert theseend insert contracts shall be at least equal to
11the cash surrenderbegin delete benefit.end deletebegin insert benefit, except that the death benefit
12payable under contracts issued to persons 65 years of age or older
13shall be at least equal to the annuity value or accumulation value
14without any surrender charges or penalties upon death.end insert
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