N.J. Admin. Code § 11:4-41.10

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:4-41.10 - Standards for survivorship forms

(a) The following requirements shall apply to survivorship forms, which provide that the death benefit is payable on the last surviving insured:

1. For any survivorship form with cash values, the values shall be calculated using exact ages, sexes and underwriting classifications. Equivalent ages or approximations may be used and will be reviewed on a case-by-case basis.

2. The form or actuarial memorandum shall describe any modifications to the published tables. If the actuarial memorandum is used to describe the modification(s), then the form shall state that a detailed statement is on file with the Department.

(b) Survivorship forms shall satisfy the following requirements regarding contestability:

1. Provisions are permitted which state that the form is incontestable after it has been in effect during the lifetime of the surviving insured for two years; and

2. Provisions are permitted which state that, with respect to each insured, coverage is incontestable after it has been in effect during the lifetime of that insured for two years, but only if the following requirements are met:

i. The insurer shall provide written notice to the policyowner at the end of the second policy year requesting that the policyowner notify the insurer of the death of any insured. The notice shall additionally state that failure to provide notice of death will not preclude a contest, and could result in a contest even if premium payments continue to be made. A sample copy of the notice shall be submitted for Department review;

ii. The contestability provision in the form shall describe the mailing of the notice in (b)2i above and shall state the adverse implications for the policyowner's failure to provide the insurer with timely notice of death;

iii. A copy of the insurer's notice and any policyowner reply shall remain on file with the insurer; and

iv. Any action of contest shall commence promptly upon notice of death.

(c) Survivorship forms shall satisfy the following requirements on suicide:

1. The insurer shall be permitted to rescind a contract as a result of suicide when both insureds or the surviving insured commit suicide during the first two years;

2. Except as provided in paragraph (c)3 below, the insurer shall reform and reissue the contract as of the original effective date as a single life contract on the surviving insured where only the first insured to die commits suicide during the first two years.

i. The insurer shall provide the single-life coverage automatically without evidence of insurability, which shall be substantially the same as the coverage provided under the original survivorship policy.

ii. Any suicide and contestability provisions of the reformed and reissued contract shall be effective as of the effective date of the original survivorship form;

3. As an alternative to the reformed and reissued contract, the insurer shall be permitted to continue the original policy as a survivorship contract.

i. The form's suicide provision shall include a description of either the reformed and reissued contract at (c)2 above, or the survivorship contract at (c)3 above;

4. Insurers shall be permitted to avoid the provision of single life coverage on the life of the survivor only if such surviving insured was uninsurable at the time the original policy was issued and the form so states; and

5. Any time limits with respect to the process of changing coverage from joint to single life coverage shall satisfy the following standards:

i. The suicide provision shall include the requirement that proof of first death shall be provided to the insurer. In the case of first death by suicide, such proof shall be provided within 90 days of the death;

ii. The provision shall indicate that the insurer shall provide information no later than 30 days after receiving notification of the death regarding any payments required for the single life coverage (for example, the new premium amount) which may be required;

iii. The provision shall allow the owner a 60-day period after receiving notification from the insurer to pay the amount(s) required; and

iv. The provision shall describe the death benefit payable in the event the survivor dies prior to expiration of the 60-day period allowed for payment without having made the payment. Such death benefit shall be based on the full face amount of the original survivorship policy net of the premium and any other required amount remaining due and payable.

(d) Insurer contestability and suicide practices for riders used with survivorship contracts shall be consistent with those for the base policy.

(e) The form shall include a provision directing the owner to submit to the insurer proof of death upon the first death.

(f) The form shall provide for reinstatement pursuant to N.J.A.C. 11:4-41.3(b)8. The insurer shall only require evidence of insurability on any insured alive on the date of default.

N.J. Admin. Code § 11:4-41.10

Recodified from N.J.A.C. 11:4-41.13 by R.2000 d.130, effective 3/20/2000.
See: 31 New Jersey Register 3910(a), 32 New Jersey Register 1024(a).
Former N.J.A.C. 11:4-41.10, Standards for policy split options, repealed.
Amended by R.2001 d.100, effective 3/19/2001.
See: 32 New Jersey Register 4045(a), 33 New Jersey Register 1006(a).
Rewrote (c)4.
Amended by R.2001 d.410, effective 11/5/2001.
See: 33 New Jersey Register 2265(a), 33 New Jersey Register 3748(a).
Added (f).