3219 - Annuity and pure endowment contracts and certain group annuity certificates; standard provisions as to contractual rights and responsibilities of cont

§ 3219. Annuity and pure endowment contracts and certain group annuity  certificates;   standard   provisions   as  to  contractual  rights  and  responsibilities of contract holders, certificate holders and  insurers.  (a)  Except  as  provided  in section four thousand two hundred forty of  this chapter, every annuity or pure endowment contract  except  a  group  annuity  contract,  and every group annuity certificate to which section  four thousand two hundred twenty-three of this chapter applies by reason  of subsection (b) thereof, or to which section four thousand two hundred  twenty-three of this chapter would apply if such certificate were not  a  variable  annuity, delivered or issued for delivery in this state, shall  contain in substance the following provisions, or provisions  which  the  superintendent  deems  to  be  more  favorable  to  the  holders of such  contracts or certificates:    (1) In any such contract or certificate requiring payments to be  made  to  the  insurer,  that, after the first payment, there shall be a grace  period of thirty-one days following  the  due  date  of  any  subsequent  payment  within  which  the  payment to the insurer may be made.  During  such grace period, the contract or certificate shall  continue  in  full  force. If a claim arises under the contract or certificate on account of  death  during  the  grace  period, the insurer may deduct from the death  benefit, or, in the case of a reversionary annuity, otherwise  called  a  survivorship  annuity,  may,  at  its option, reduce annuity payments to  take into account the portion of any unpaid payment  applicable  to  the  period  ending  with  the  last  day  of  the  month in which such death  occurred;    (2) That, with respect to any statements, other than those relating to  age, sex, and identity, required as a condition of issuing the  contract  or certificate, the contract or certificate shall be incontestable after  it has been in force during the lifetime of the person or of each of the  persons  as  to  whom  such statements are required, for a period of two  years from its date of issue, except  where  payments  required  by  the  contract  or  certificate  to be made to the insurer have not been made,  and except for violation of the conditions, if any, of the  contract  or  certificate  relating  to service in the armed forces; and at the option  of the insurer, such contract or certificate may also except  provisions  relating to benefits for total and permanent disability and benefits for  accidental death;    (3)  That  the  contract,  together with the application therefor if a  copy of such application is attached to the contract when issued,  shall  constitute the entire contract between the parties;    (4)  That nothing in the group annuity contract invalidates or impairs  any right granted to the certificate  holder  by  this  section  or  the  certificate;    (5) That if the age or sex of the person or persons upon whose life or  lives  the  contract  or  certificate is made or of any of them has been  misstated, the amount payable or benefit accruing under the contract  or  certificate  shall  be  such  as  the payments to the insurer would have  purchased according to the correct age or sex; and that if  the  insurer  makes   any   underpayment   or  overpayment  on  account  of  any  such  misstatement, the  amount  thereof,  with  interest  at  a  rate  to  be  specified  in  the  contract  or  certificate  but not exceeding six per  centum per annum, shall be credited to, or charged against, the  current  or  next  succeeding payment or payments to be made by the insurer under  the contract or certificate;    (6) That the  insurer  shall  annually  ascertain  and  apportion  any  divisible surplus accruing on the contract;    (7)  Specifying  the  options  available  upon cessation of payment of  considerations under a contract or certificate. Such options, except forthose under a reversionary annuity or pure endowment contract, shall  be  in  accordance  with  section  four thousand two hundred twenty-three of  this chapter;    (8)  In any such contract or certificate requiring payments to be made  to the insurer that at any time within three  years  from  the  date  of  default  in  making  payments  to  the insurer unless the cash surrender  value has been paid, the contract or certificate shall be reinstated  if  the  person  entitled thereto pursuant to the provisions of the contract  or certificate    (A) applies to the insurer therefor,    (B) pays to the insurer all overdue payments and all  indebtedness  on  the  contract or certificate with interest on such overdue payments at a  rate specified in the contract or certificate but not to exceed six  per  cent   per   annum,  compounded  annually,  and  interest  on  any  such  indebtedness at a rate or rates not exceeding the applicable  loan  rate  or  rates  determined in accordance with the contract's or certificate's  provisions, and    (C) where required by the insurer as  a  condition  of  reinstatement,  provides  evidence  of  insurability  including  good  health reasonably  satisfactory to the insurer;    (9) That upon surrender of the contract or certificate, together  with  a  written  request  for cancellation, to the insurer during a period of  not less than ten days nor more than  thirty  days  from  the  date  the  contract or certificate was delivered to the holder thereof, the insurer  refund   either   (i)   any  consideration  paid  for  the  contract  or  certificate, including any fees or other charges or, if the contract  or  certificate,  or  notice attached thereto, so provides, and the contract  or certificate is subject to the provisions of section four thousand two  hundred twenty-three of this chapter and provides for the  determination  of  any  cash  surrender  benefits  in  accordance  with  a market-value  adjustment formula, (ii) the  amount  of  the  cash  surrender  benefits  provided  under  the contract or certificate plus the amount of all fees  and other charges deducted from gross considerations  or  imposed  under  the contract or certificate. This provision shall appear in the contract  or  certificate  or  in a notice attached to it; provided, however, that  the contract or certificate sold by mail order must contain a  provision  permitting  the  contract  or certificate holder a thirty day period for  such surrender.    (b) Any of the provisions of subsection (a)  hereof  or  portions  not  applicable   to  non-participating  contracts  or  certificates  or  not  applicable to contracts or certificates for which a  single  payment  to  the  insurer  is made shall, to that extent, not be incorporated in such  contract or certificate. Paragraphs one and eight of subsection  (a)  of  this  section  shall  not apply to contracts or certificates that do not  require payments to be made to the insurer. An  insurer  shall  issue  a  certificate  for  delivery  to  a  person  covered under a group annuity  contract  if  such  certificate,  when  issued,  would  be  subject   to  subsection (a) of this section.    (c) Annuity contracts subject to this section may permit an adjustable  maximum  rate of interest on loans. Any such contract shall provide that  loans shall bear interest at a rate  not  in  excess  of  an  adjustable  maximum  interest  rate  established from time to time by the insurer as  permitted by law, and shall specify the regular intervals at  which  the  interest  rate  is  to  be determined which shall be at least once every  twelve months, but not more frequently than  once  in  any  three  month  period.    (d)  This  section shall not apply to contracts for deferred annuities  or reversionary annuities upon the lives  of  beneficiaries  under  lifeinsurance policies, nor, except to the extent expressly provided herein,  to group annuity contracts.