SB 426, as amended, 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 or delivered on or after January 1, 2016, to persons 65 years of age or older to be at least equal to the annuity value or accumulation value, excluding any surrender charges or penalties upon death. The bill would also make technical changes.
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
2repealed.
Section 10168.4 is added to the Insurance Code, to
4read:
Contracts that provide cash surrender benefits shall
2comply with all of the following:
3(a) Cash surrender benefits available prior to maturity shall not
4be less than the present value as of the date of surrender of that
5portion of the maturity value of the paid-up annuity benefit which
6would be provided under the contract at maturity arising from
7considerations paid prior to the time of cash surrender reduced by
8the amount appropriate to reflect any prior withdrawals from or
9partial surrenders of thebegin delete contract.end deletebegin insert contract, decreased by the
amount
10of any indebtedness to the company on the contract, including
11interest due and accrued on the indebtedness, and increased by
12any existing additional amounts credited by the company to the
13contract.end insert
14(b) For purposes of subdivisionbegin delete (d),end deletebegin insert
(a),end insert the present value shall
15be calculated on the basis of an interest rate that is not more than
161 percent higher than the interest rate specified in the contract for
17accumulating the net considerations to determine the maturity
18begin delete value, decreased by the amount of any indebtedness to the company begin insert value.end insert
19on the contract, including interest due and accrued, and increased
20by any existing additional amounts credited by the company to the
21contract.end delete
22(c) The cash surrender benefit shall not be less than the
23minimum nonforfeiturebegin delete amount.end deletebegin insert
amount at the time of the
24surrender.end insert
25(d) (1) Except as otherwise provided in paragraph (2), the death
26benefit shall be at least equal to the cash surrender benefit.
27(2) For contracts issued or delivered on or after January 1, 2016,
28to persons who are 65 years of age or older, the death benefit shall
29be at least equal to the annuity value or accumulation value,
30excluding any surrender charges or penalties upon death.
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