BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 590|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 590
Author: Calderon (D)
Amended: 8/29/11
Vote: 21
SENATE INSURANCE COMMITTEE : 6-2, 3/23/11
AYES: Calderon, Gaines, Anderson, Lieu, Price, Wyland
NOES: Corbett, Lowenthal
NO VOTE RECORDED: Correa
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 28-9, 5/31/11
AYES: Anderson, Blakeslee, Calderon, Cannella, Correa, De
Le�n, Dutton, Emmerson, Fuller, Gaines, Harman,
Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Negrete
McLeod, Padilla, Rubio, Runner, Simitian, Steinberg,
Strickland, Vargas, Walters, Wright, Yee
NOES: Alquist, Corbett, DeSaulnier, Evans, Hancock, Liu,
Lowenthal, Pavley, Wolk
NO VOTE RECORDED: Berryhill, Price, Wyland
ASSEMBLY FLOOR : 71-5, 9/1/11 - See last page for vote
SUBJECT : Life insurance
SOURCE : American Bankers Insurance Company
DIGEST : This bill exempts the sale of certain life
insurance policies for funeral and burial expenses from the
CONTINUED
SB 590
Page
2
requirement that the agent provide the senior with a notice
at least 24 hours prior to the initial meeting, provided a
60-day cancellation period is allowed.
Assembly Amendments revise and recast the bill with a
similar intent as it left the Senate.
ANALYSIS : 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. 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 more than 30
days.
This bill:
1. Provides that a person selling life insurance to a
senior does not need to deliver a written notice 24
hours prior to the initial meeting in the senior's home
when the sale is for life insurance to pay funeral and
burial expenses, and the life insurance policy has an
initial face amount of $15,000 or less. These policies
are known as pre-need life insurance policies.
2. Requires, within 14 days of the purchase of a policy,
that the issuer provide the senior by first-class mail a
written notice of the purchase and a 60-day right of
cancellation, 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 notice recipient is
authorized to call the insurer to inquire about the
SB 590
Page
3
policy on behalf of the policyholder.
C. A cancellation form.
D. Information on how to contact the Department of
Insurance (DOI) for information or to file a
complaint, including the telephone number of DOI's
customer assistance office.
3. Requires an agent when selling a pre-need life policy
that is exempt from the 24-hour advance notice
requirement, at the time of the meeting in the
purchaser's home, to provide the following statements:
A. During this visit or a follow-up visit, you will
be given a sales presentation on the following
�indicate all that apply]:
(1) Life insurance, including annuities
(2) Other insurance products �specify]:
____________________.
B. You have the right to have other persons present
at the meeting, including family members, financial
advisors, or attorneys.
C. You have the right to end the meeting at any time.
D. 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 number at the DOI.]
E. The following individuals will be coming to your
home: �list all attendees, and insurance license
information, if applicable].
F. You have the right to postpone or reschedule the
meeting if you wish to have other persons present,
including family members, financial advisors, or
attorneys.
4. Specifies that an agent who sells a pre-need life
SB 590
Page
4
insurance policy to a senior in the senior's home may
not sell any other life insurance or annuities without
first providing the 24-hour advance notice.
5. Requires policies of individual life insurance with a
face value of $15,000 or less to have a printed notice
informing the owner that the policy may be returned for
cancellation. The return period set forth by the
insurer and stated in the notice shall be between 10 and
30 days, however, if the life insurance for funeral and
burial expenses is sold without a 24-hour advance
notice, the purchaser shall have 60 days to return the
policy.
6. Provides that this bill applies to policies issued or
renewed after
January 1, 2012.
Prior legislation . This bill is similar to SB 397
(Calderon), 2009-10 Session, which was vetoed. In his veto
message, Governor Schwarzenegger stated:
"During the previous two legislative sessions, I have
vetoed similar legislation that would have granted an
exemption from the current requirement that seniors be
given 24-hour notice in advance of any attempt to meet in
a senior's home to discuss the sale of a burial or
funeral policy. I stated my belief that this notice
requirement creates an important 'bright line' test that
insurance agents know not to cross and is a sound
consumer protection practice.
"Although this measure provides additional notice
requirements to attempt to protect against fraud, I
remain unconvinced of the need to deviate from the
current 24-hour notice requirement. Asking an agent to
wait one day before meeting in someone's home is a minor
request in order to protect seniors against fraud."
During both the 2005-06 Session, and the 2007-08 Session,
related bills were passed and vetoed (AB 608 �Calderon] and
SB 739 �Calderon]). The current bill includes significant
new consumer protections not included in the earlier
measures.
SB 590
Page
5
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/26/11)
American Bankers Insurance Company (source)
California Funeral Directors Association
Cemetery and Mortuary Association of California
SCI California Funeral Service
OPPOSITION : (Verified 8/26/11)
American Association of Retired Persons
California Advocates for Nursing Home Reform
ASSEMBLY FLOOR : 71-5, 9/1/11
AYES: Achadjian, Alejo, Allen, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bradford, Brownley,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Conway, Cook, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall,
Harkey, Hayashi, Roger Hern�ndez, Huber, Hueso, Jeffries,
Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, John A.
P�rez
NOES: Ammiano, Buchanan, Hill, Huffman, Yamada
NO VOTE RECORDED: Bonilla, Davis, Gorell, Pan
JJA:mw 9/1/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
SB 590
Page
6