Chapter 210

2007 -- S 0389 AS AMENDED

Enacted 07/02/07

A N A C T

RELATING TO INSURANCE -- LIFE INSURANCE

Introduced By: Senator Leo R. Blais

Date Introduced: February 13, 2007

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 27-4-4, 27-4-5, 27-4-6.1, 27-4-24.3, 27-4-24.4, 27-4-24.5 and 27-

4-24.6 of the General Laws in Chapter 27-4 entitled "Life Insurance Policies and Reserves" are

hereby amended to read as follows:

27-4-4. Penalty for unlawful discrimination. -- Any life insurance company, and any

officer or insurance producer agent of any life insurance company, violating any of the provisions

of sections 27-4-1 and 27-4-3 shall forfeit a sum not exceeding one hundred dollars ($100) be

subject to penalties determined in accordance with section 42-14-1.

27-4-5. Misrepresentation as to policies -- Penalty -- Revocation of license. -- No life

insurance corporation doing business in this state, and no officer, director, or insurance producer

agent of that corporation, shall issue or circulate, or cause or permit to be issued or circulated, any

estimate, illustration, circular, or statement of any sort misrepresenting the terms of any policy

issued by it, or the benefits or advantages promised by it; nor shall any corporation or insurance

producer agent of the corporation orally or in writing make any misrepresentation or incomplete

comparisons regarding the cost or terms or conditions or benefits contained in any policy or

contract of insurance to any person insured in any other corporation, for the purpose of inducing

or tending to induce that person to lapse, forfeit, or surrender his or her insurance in any other

corporation. Any violation of this section shall constitute a misdemeanor and shall be punishable

by a fine of not less than one hundred dollars ($100) nor more than five hundred dollars ($500),

and it shall be the duty of the The director of business regulation is empowered to revoke the

license of the corporation or insurance producer violating these provisions or access whatever

penalty is appropriate in accordance with section 42-14-16 in accordance with the Administrative

Procedures Act, chapter 35 of title 42; the license is not to be renewed reinstated until at least

three (3) years have elapsed since the date of revocation, but the license may be renewed after a

shorter period after revocation, at the discretion of the director of business regulation.

27-4-6.1. Right to examine and return policy. -- Every individual life insurance policy

delivered or issued for delivery in this state after July 1, 1978, and every individual annuity

contract delivered in this state after January 1, 1995, shall contain a provision, or in a separate

rider attached when delivered, stating in substance that the person to whom the policy or contract

is issued shall be permitted to return the policy or contract within a minimum of ten (10) days of

its delivery to that person and to have a refund of the premium paid, if after examination of the

policy or contract the purchaser is not satisfied with it for any reason. Every individual life

insurance policy and every individual annuity contract delivered in this state after January 1,

2007, shall contain a provision, or in a separate rider attached when delivered, stating in

substance that the person to whom the policy or contract is issued shall be permitted to return the

policy or contract within a minimum of twenty (20) days of its delivery to that person and to have

a refund of the premium paid, if after examination of the policy or contract the purchaser is not

satisfied with it for any reason. The provision shall be set forth in the policy or contract under an

appropriate caption and, if not printed on the face page of the policy or contract, adequate notice

of the provision shall be printed or stamped conspicuously on the face page. The policy or

contract may be returned to the insurer at its home or branch office or to the insurance producer

through whom it was applied for, and then shall be void as from the beginning and as if the policy

or contract had not been issued.

27-4-24.3. Suspension or revocation of licenses. -- (a) The commissioner may revoke or

suspend the license of any organization or insurer which fails to comply with an order of the

commissioner within the time limited by the order, or any extension of it which the commissioner

may grant. The commissioner shall not revoke or suspend the license of any organization or

insurer for failure to comply with an order until the time prescribed for an appeal has expired or,

if an appeal has been taken, until the order has been affirmed.

      (b) The commissioner may determine when a suspension of license shall become

effective, and it shall remain in effect for the period fixed by the commissioner, unless he or she

modifies or rescinds the suspension, or until the order upon which the suspension is based is

modified, rescinded, or reversed.

      (c) No license shall be suspended or revoked except upon a written order of the

commissioner, stating the commissioner's findings, made after a hearing held in accordance with

section 42-35-9 upon not less than ten (10) days' written notice to the insurer or organization.

27-4-24.4. Hearing on decisions of commissioner. -- Any organization or insurer

aggrieved by any order or decision of the commissioner, or by any rule or regulation promulgated

and adopted by the commissioner, may, within thirty (30) days after notice of the order or

decision to the organization or insurer, make written request to the commissioner for a hearing on

the order or decision. Within twenty (20) days after receipt of the written request, the

commissioner shall hear the party or parties and shall give not less than ten (10) days' written

notice of the time and place of the hearing. Within fifteen (15) days after the hearing the

commissioner shall affirm, reverse, or modify his or her previous action, specifying his or her

reasons for the decision. The commissioner shall provide a hearing and issue a decision in

accordance with the Administrative Procedures Act, chapter 42-35-1.

27-4-24.5. Judicial review of orders and decisions. -- (a) Any final order or decision of

the commissioner, including any order made after a hearing under the provisions of section 27-4-

24.3 or 27-4-24.4, shall be subject to review in accordance with the Administrative Procedures

Act, chapter 42-35-1. by petition filed within twenty (20) days after notice of it at the instance of

any party in interest in the superior court for the counties of Providence and Bristol. The matter

shall be heard de novo in the superior court and decisions on issues of fact in it shall be in

accordance with the preponderance of the evidence presented there.

(b) The court shall determine whether the order or decision of the commissioner shall be

stayed pending review. The court may, in disposing of the issue before it, modify, affirm, or

reverse the order or decision of the commissioner in whole or in part.

(c) An appeal may be taken from the decision of the superior court to the supreme court,

and that appeal shall follow the course of equity.

27-4-24.6. Severability. -- If any subsection, subdivision, paragraph, sentence, or clause

of sections 27-4-24 -- 27-4-24.5 this chapter is held invalid or unconstitutional, that decision shall

not affect the remaining portions of the section or sections.

     SECTION 2. Section 27-4-8 of the General Laws in Chapter 27-4 entitled "Life

Insurance Policies and Reserves" is hereby repealed.

27-4-8. Penalty for violations of sections 27-4-6 and 27-4-7. -- Any person violating

any provision of sections 27-4-6 and 27-4-7 shall, upon conviction, be punished by a fine not

exceeding five hundred dollars ($500) or by imprisonment not exceeding one year, or both.

     SECTION 3. Chapter 27-4 of the General Laws entitled "Life Insurance Policies and

Reserves" is hereby amended by adding thereto the following section:

27-4-6.2. Individual life insurance policy standard provisions. – (a) All individual life

insurance policies, except as otherwise stated herein, delivered or issued for delivery in this state

on or after January 1, 2007 shall contain in substance the following provisions, or provisions

which the director deems to be more favorable to policyholders.

(1) Grace period – a provision that, after payment of the first premium, the policyholder

is entitled to a grace period of thirty-one (31) days or of one month following any subsequent

premium due date within which to make payment of the premium then due, during which grace

period the policy shall continue in full force, and the policy shall further provide that if the death

of the insured occurs within the grace period provided in the policy, the insurer may deduct from

the policy proceeds the portion of any unpaid premium applicable to the period ending with the

last day of the policy month in which such death occurred, and if the death of the insured occurs

during a period for which the premium has been paid, the insurer shall add to the policy proceeds

a refund of any premium actually paid for any period beyond the end of the policy month in

which such death occurred, provided such premium was not waived under any policy provision

for waiver of premiums benefit. This subsection shall not apply to single premium or paid-up

policies.

(2) Incontestability – a provision that the policy shall be incontestable after being in force

during the lifetime of the insured for a period of two (2) years from its date of issue, and that, if

the policy provides that the death benefit provided by the policy may be increased, or other policy

provisions changed, upon the application of the policyholder and the production of evidence of

insurability, the policy with respect to each such increase or change shall be incontestable after

two (2) years from the effective date of such increase or change, except in each case for

nonpayment of premiums. At the option of the insurer, provisions relating to benefits for total and

permanent disability and additional benefits for accidental death may be excepted.

(b) Individual life insurance policies delivered or issued for delivery in this state on or

after January 1, 2007 may contain in substance the following provision, or a provision which the

director deems to be more favorable to policyholders: Suicide – a provision that excludes death

from suicide, sane or insane. The suicide exclusion period for the initial coverage shall not exceed

two (2) years from the date of issue of the policy. The policy may allow a separate suicide period,

no greater than two (2) years from the date of any increase, for any increase in specified amount

that was requested by the owner and subject to evidence of insurability. The suicide limitation

shall be limited to the amount of the increase. At a minimum, a refund of all premiums paid, less

dividends paid, any indebtedness and any partial withdrawals, shall be paid by the company in the

event of death by suicide during the initial suicide exclusion period. For each increase in specified

amount, the settlement for suicide shall be the return of all premium paid, reduced as specified

above for the initial coverage, applicable to the increased amount.

     SECTION 4. This act shall take effect upon passage.

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LC01448

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