HP0648, LD 881, item 1, An Act To Amend Certain Insurance Provisions Relating to Variable Annuity Death Benefits and Multiple Employer Trusts

An Act To Amend Certain Insurance Provisions Relating to Variable Annuity Death Benefits and Multiple Employer Trusts

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 24-A MRSA §2537, sub-§10, as repealed and replaced by PL 2007, c. 544, §1, is amended to read:

10. A variable annuity contract delivered or issued for delivery in this State may include as an incidental benefit a provision for payment on death during the deferred period of an amount equal to the greater of the sum of the premiums or stipulated payments paid under the contract less adjusted withdrawals from the policy and the value of the contract at the time of death. The beneficiary under the contract may not be paid any other amount. A variable annuity contract that includes such incidental benefit may not be deemed to be life insurance and therefore is not subject to the provisions of this Title governing life insurance contracts. A variable annuity contract with a provision for any other benefit on death during the deferred period is subject to the provisions of this Title governing life insurance contracts. A payment on death pursuant to a variable annuity contract under this subsection must be made in accordance with section 2436. This subsection applies to variable annuity contracts delivered or issued for delivery in this State on or after January 1, 2009.

Sec. 2. 24-A MRSA §2606-A, first ¶, as enacted by PL 1981, c. 150, §7, is amended to read:

The lives of a group of individuals may be insured under a policy issued to a trust or to the trustee or trustees of a fund established or adopted by 2 or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees are considered the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements.

summary

This bill amends Maine's minimum variable annuity death benefit law, which currently requires a return of premium, to provide that the premium returned should be reduced by amounts that the insurance company has already distributed to the policy owners as, for example, in the form of cash withdrawals, loans or qualified transfers.

The bill allows life insurance to be provided to trust groups without requiring that employers agree to serve as settlors of the trust. This change will permit the creation of trust groups adopted by two or more employers instead of limiting the law to trusts established by employers. This change makes Maine law consistent with the national standards represented by the National Association of Insurance Commissioners model.

HP0648 LD 881	First Regular Session - 125th Maine Legislature		LR 1933 Item 1
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