[PART V.] 
REPLACEMENT OF LIFE INSURANCE POLICIES AND ANNUITIES



 



§431:10D-501  Purpose and scope.  (a) 
The purpose of this part is to:



(1)  Regulate the activities of insurers and producers
with respect to the replacement of existing life insurance and annuities; and



(2)  Protect the interests of life insurance and
annuity purchasers by establishing minimum standards of conduct to be observed
in replacement or financed purchase transactions that will:



(A)  Assure that purchasers receive information
with which a decision can be made in the purchasers' best interests;



(B)  Reduce the opportunity for
misrepresentation and incomplete disclosure; and



(C)  Establish penalties for failure to comply
with requirements of this part.



(b)  Unless otherwise specifically included,
this part shall not apply to transactions involving:



(1)  Credit life insurance;



(2)  Group life insurance or group annuities where
there is no direct solicitation of individuals by an insurance producer. 
Direct solicitation shall not include any group meeting held by an insurance
producer solely for the purpose of educating or enrolling individuals when
initiated by an individual member of the group assisting with the selection of
investment options offered by a single annuity provider in connection with
enrolling the individuals.  Group life insurance or group annuity certificates
marketed through direct-response solicitation shall be subject to section
431:10D-507;



(3)  Group life insurance used to fund prearranged
funeral contracts;



(4)  An application to the existing insurer that
issued the existing policy or contract when a contractual change or a
conversion privilege is being exercised; or, when the existing policy or
contract is being replaced by the same insurer pursuant to a program filed with
and approved by the commissioner; or, when a term conversion privilege is
exercised among corporate affiliates;



(5)  Proposed life insurance that is to replace life
insurance under a binding or conditional receipt issued by the same company;



(6)  Policies or contracts used to fund:



(A)  An employee pension or welfare benefit
plan that is covered by the Employee Retirement and Income Security Act
(ERISA);



(B)  A plan described by sections 401(a),
401(k) or 403(b) of the Internal Revenue Code of 1986, as amended, where the
plan, for purposes of ERISA, is established or maintained by an employer;



(C)  A governmental or church plan defined in
section 414 of the Internal Revenue Code of 1986, as amended, a governmental or
church welfare benefit plan, or a deferred compensation plan of a state or
local government or tax exempt organization under section 457 of the Internal
Revenue Code of 1986, as amended; or



(D)  A nonqualified deferred compensation
arrangement established or maintained by an employer or plan sponsor;



provided that, notwithstanding the exemptions
listed in subparagraphs (A) to (D), this part shall apply to policies or
contracts used to fund any plan or arrangement that is funded solely by
contributions an employee elects to make, whether on a pre-tax or after-tax
basis, and where the insurance company has been notified that plan participants
may choose from among two or more annuity providers or policy providers and
there is a direct solicitation of an individual employee by an insurance
producer for the purchase of a contract or policy.  As used in this subsection,
direct solicitation shall not include any group meeting held by an insurance
producer solely for the purpose of educating individuals about the plan or
arrangement or enrolling individuals in the plan or arrangement or, when
initiated by an individual employee assisting with the selection of investment
options offered by a single annuity provider in connection with enrolling that
individual employee;



(7)  Where new coverage is provided under a life
insurance policy or contract and the cost is borne wholly by the insured's
employer or by an association of which the insured is a member;



(8)  Existing life insurance that is a non-convertible
term life insurance policy that will expire in five years or less and cannot be
renewed;



(9)  Immediate annuities that are purchased with
proceeds from an existing contract; provided that immediate annuities purchased
with proceeds from an existing policy are not exempted from the requirements of
this part; and



(10)  Structured settlements.



(c)  Registered contracts shall be exempt from
the requirements of sections 431:10D-505(a)(2) and 431:10D-506(2) with respect
to the provision of illustrations or policy summaries; however, premium or contract
contribution amounts and identification of the appropriate prospectus or
offering circular shall be required instead. [L 2000, c 252, pt of §3; am L
2008, c 155, §4]