Connecticut Department of Insurance Approves New Regulations for Replacement of Life Insurance and Annuities
May 24, 2013
The Connecticut Department of Insurance has advised that Regulations 38a-435-1 to 38-435-8 relating to activities required of insurers and producers in the replacement of existing life insurance and annuities will become effective on July 23, 2013.
To view the new Rules, click here.
These regulations are designed to protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions. This is expected to result in reduced opportunity for misrepresentation and incomplete disclosure, while ensuring that purchasers receive information to make a decision in his or her own best interest.
As defined by the new Rules, a “replacement” is a transaction in which a new policy or contract is to be purchased, and an existing policy or contract has or will be:
- Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;
- Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
- Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
- Reissued with any reduction in cash value;
- Used in a financed purchase.