Sponsored by:
Senator NELLIE POU
District 35 (Bergen and Passaic)
SYNOPSIS
Revises limits for net cash surrender and net cash withdrawal values for certain annuity policies and contracts from $100,000 to $250,000.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning annuity policies and contracts and amending P.L.1991, c.208.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1991, c.208 (C.17B:32A-3) is amended to read as follows:
3. a. P.L.1991, c.208 (C.17B:32A-1 et seq.) shall provide coverage, for the policies and contracts specified in subsection b. of this section, to:
(1) persons who, regardless of where they reside (except for nonresident certificate holders under group policies or contracts), are the beneficiaries, assignees or payees, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under paragraph (2) of this subsection; and
(2) persons who are owners of or certificate holders or enrollees under those policies or contracts (other than unallocated annuity contracts, and structured settlement annuities) and in each case who:
(a) are residents, or
(b) are not residents, but only if:
(i) the member insurers which issued the policies or contracts are domiciled in this State;
(ii) those member insurers, health service corporations, hospital service corporations, medical service corporations, or health maintenance organizations never held a license or certificate of authority in the states in which those persons reside;
(iii) those states have associations and coverage provisions with respect to residency similar to the association created by P.L.1991, c.208 (C.17B:32A-1 et seq.); and
(iv) those persons are not eligible for coverage by those associations.
(3) For unallocated annuity contracts specified in subsection b. of this section, paragraphs (1) and (2) of this subsection shall not apply, and P.L.1991, c.208 (C.17B:32A-1 et seq.) shall (except as provided in paragraphs (5) and (6) of this subsection) provide coverage to persons who are the owners of the unallocated annuity contracts:
(a) if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this State; and
(b) issued to or in connection with government lotteries if the owners are residents.
(4) For structured settlement annuities specified in subsection b. of this section, paragraphs (1) and (2) of this subsection shall not apply, and P.L.1991, c.208 (C.17B:32A-1 et seq.) shall (except as provided in paragraphs (5) and (6) of this subsection) provide coverage to a person who is a payee under a structured settlement annuity (or beneficiary of a payee if the payee is deceased) if the payee:
(a) is a resident, regardless of where the contract owner resides; or
(b) is not a resident, but only under both of the following conditions:
(i) the contract owner of the structured settlement annuity is a resident or is not a resident but the insurer that issued the settlement annuity is domiciled in New Jersey and the state in which the contract owner resides has an association similar to the association created by P.L.1991, c.208 (C.17B:32A-1 et seq.); and
(ii) the payee (or beneficiary) and the contract owner are not eligible for coverage by the association of the state in which the payee or contract owner resides.
(5) P.L.1991, c.208 (C.17B:32A-1 et seq.) shall not provide coverage to a person:
(a) who is a payee (or beneficiary) of a contract owner resident of this State, if the payee (or beneficiary) is afforded any coverage by the association of another state;
(b) covered under paragraph (3) of this subsection, if any coverage is provided by the association of another state to the person; or
(c) who acquires rights to receive payments through a structured settlement factoring transaction as defined in section 5891 of the federal Internal Revenue Code, 26 U.S.C. s.5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective.
(6) P.L.1991, c.208 (C.17B:32A-1 et seq.) is intended to provide coverage to a person who is a resident of this State and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under P.L.1991, c.208 (C.17B:32A-1 et seq.) is provided coverage under the law of another state, the person shall not be provided coverage under P.L.1991, c.208 (C.17B:32A-1 et seq.). In determining the application of the provisions of this paragraph in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary or assignee, P.L.1991, c.208 (C.17B:32A-1 et seq.) shall be construed in conjunction with other state laws to result in coverage by only one association.
b. P.L.1991, c.208 (C.17B:32A-1 et seq.) shall provide coverage to the persons specified in subsection a. of this section for policies or contracts of:
(1) direct, non-group life insurance, health insurance (which for the purposes of P.L.1991, c.208 (C.17B:32A-1 et seq.) includes health service corporation contracts, hospital service corporation contracts, medical service corporation contracts, and health maintenance organization subscriber contracts and certificates), or annuities and supplemental policies or contracts, for certificates under direct group life insurance, health insurance, annuities and supplemental policies and contracts, for individual and group long-term care insurance policies and contracts, and for unallocated annuity contracts, issued by member insurers, except as limited by P.L.1991, c.208 (C.17B:32A-1 et seq.); and
(2) policies or contracts issued by medical service corporations declared to be insolvent or impaired by a court of competent jurisdiction on or after September 1, 1987, but prior to the effective date of P.L.1991, c.208 (C.17B:32A-1 et seq.), except as otherwise limited by P.L.1991, c.208 (C.17B:32A-1 et seq.).
c. Except as otherwise provided in subsection d. of this section, P.L.1991, c.208 (C.17B:32A-1 et seq.) shall not provide coverage for:
(1) any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;
(2) any policy or contract of reinsurance, unless assumption certificates have been issued;
(3) any portion of a policy or contract to the extent that the rate of interest on which it is based:
(a) averaged over the four-year period prior to the date on which the association becomes obligated with respect to that policy or contract, exceeds the lesser of:
(i) the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period, or for such lesser period if the policy or contract was issued less than four years before the association became obligated, or
(ii) the rate of interest specified in the standard valuation law, or the rules of this State for determining the minimum standard for the valuation of policies or contracts issued during the year of insolvency; and
(b) on and after the date on which the association becomes obligated with respect to that policy or contract, exceeds the rate of interest determined by subtracting four percentage points from Moody's Corporate Bond Yield Average as most recently a