County of Los Angeles
Department of Consumer Affairs
New Consumer Laws 2012
Insurance – Life: Clearer payment options disclosures for beneficiaries
SB 713 - Chapter 130 - Ins. Code §§10509.930 et seq.
Effective January 1, 2012
Summary: Requires life insurers to provide disclosures on death settlement payment options and a supplemental contract to the beneficiary on their rights and obligations.
Background: Retained asset accounts were developed in response to policyholders who wanted their life insurer to provide a service that would allow them to delay major financial decisions during an emotional and vulnerable time. These accounts provide consumers with the option of leaving death benefit proceeds in an account on deposit with the insurance company instead of receiving a lump sum payment. Last year, the life insurance industry came under fire for automatically placing life insurance benefits to families of deceased soldiers into these accounts.
The New Law: Establishes the Life Insurance Proceeds Disclosure Act of 2011, which requires life insurers to provide disclosures regarding death settlement payment options, including retained asset accounts, to policyholders and beneficiaries. Insurers are required to provide the beneficiary with a supplemental contract disclosing the rights of the beneficiary and obligations of the insurer if the beneficiary chooses death settlement payment to be placed into a retained asset accounts. It also required at least a quarterly statement to the beneficiary on the status of the funds in the account. This bill is related to SB 599.
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the County of Los Angeles Department of Consumer Affairs.
For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452