National Conference of Insurance Legislators (NCOIL) President Rep. Robert R. Damron (KY) has released a “Beneficiaries’ Bill of Rights” draft to “ensure strong consumer protections and clear disclosures about retained asset accounts (RAAs.)
Damron wants NCOIL to provide guidance to the 44 states that NCOIL says does not regulate such accounts.
The release of the draft document comes days before state insurance regulators at the National Association of Insurance Commissioners, Kansas City, Mo., prepare to review the issue at its summer national meeting.
Damron asserts that “The model bill guarantees that life insurance consumers and beneficiaries will be fully protected during their greatest times of need. Our model would forbid insurers from using RAAs as a default method of paying death benefits and require that beneficiaries opt in to allow use of such accounts. The legislation would mandate that insurers using RAAs provide clear and comprehensive disclosure about beneficiaries’ policy options and would require the specific disclosure that beneficiaries can write one single check to access the entire death benefit.”
The Beneficiaries’ Bill of Rights, developed and sponsored by Rep. Damron, would require insurers to provide beneficiaries a full explanation of the retained-asset account’s features—including whether the monies are guaranteed by the Federal Deposit Insurance Corporation (FDIC) or by a state guaranty fund. It would also require insurers to disclose to beneficiaries the method used to determine the interest rate being paid under the RAA.
The draft will receive additional discussion at NCOIL’s Life Insurance & Financial Planning Committee on Nov. 19 during the Nov. 18-21 NCOIL Annual Meeting in Austin, Texas.