Current through Register Vol. 56, No. 18, September 16, 2024
(a) The purpose
of this subchapter is:
1. To regulate the
activities of insurers and producers with respect to the replacement of
existing life insurance and annuities; and
2. 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 by:
i. Assuring that a purchaser receives
information with which a decision can be made in his or her own best
interest;
ii. Reducing the
opportunity for misrepresentation and incomplete disclosures; and
iii. Establishing penalties for failure to
comply with the requirements of this subchapter.
(b) This subchapter shall apply to
all replacement transactions of life insurance policies and annuities contracts
issued or delivered in this State except as set forth at (c) below.
(c) Unless otherwise specifically included,
this subchapter shall not apply to transactions involving:
1. Credit life insurance;
2. Group life insurance or group annuities
where there is no direct solicitation of individuals by an insurance producer.
Direct solicitation shall not include any group meeting held by an insurance
producer solely for the purpose of educating or enrolling individuals or, when
initiated by an individual member of the group, assisting with the selection of
investment options offered by a single insurer in connection with enrolling
that individual. Group life insurance or group annuity certificates marketed
through direct response solicitation shall be subject to the provisions of
11:4-2.7;
3. Group life insurance and group annuities
used to fund prearranged funeral contracts where there is no direct
solicitation of individuals by an insurance producer. Direct solicitation shall
not include any group meeting held by an insurance producer solely for the
purpose of educating or enrolling individuals or, when initiated by an
individual member of the group, assisting with the selection of investment
options offered by a single insurer in connection with enrolling that
individual;
4. An application to
the existing insurer that issued the existing policy or contract when a
contractual change or a conversion privilege is being exercised; or when the
existing policy or contract is being replaced by the same insurer pursuant to a
program filed with and approved by the Commissioner, or when a term conversion
privilege is exercised among corporate affiliates;
5. Proposed life insurance that is to replace
life insurance under a binding or conditional receipt issued by the same
company;
6. Policies or contracts
used to fund:
i. An employee pension or
welfare benefit plan that is covered by the Employee Retirement and Income
Security Act (ERISA);
ii. A plan
described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code,
where the plan, for purposes of ERISA, is established or maintained by an
employer;
iii. A governmental or
church plan defined in Section 414 of the Internal Revenue Code, a governmental
or church welfare benefit plan, or a deferred compensation plan of a state or
local government or a tax exempt organization under Section 457 of the Internal
Revenue Code; or
iv. A nonqualified
deferred compensation arrangement established or maintained by an employer or
plan sponsor;
7. Where
new coverage is provided under a life insurance policy or contract and the cost
is borne wholly by the insured's employer or by an association of which the
insured is a member;
8. Existing
life insurance that is a non-convertible term life insurance policy that shall
expire in five years or less and cannot be renewed;
9. Immediate annuities that are purchased
with proceeds from an existing annuity contract. Immediate annuities purchased
with proceeds from an existing life insurance policy are not exempted from the
requirements of this subchapter; or
10. Structured settlements.
(d) Notwithstanding (c)6 above,
this subchapter shall apply to policies or contracts used to fund any plan or
arrangement that is funded solely by contributions an employee elects to make,
whether on a pre-tax or after tax basis, and where the insurer has been
notified that plan participants may choose from among two or more insurers and
there is a direct solicitation of an individual employee by an insurance
producer for the purchase of a contract or policy. As used in this subsection,
direct solicitation shall not include any group meeting held by an insurance
producer solely for the purpose of educating individuals about the plan or
arrangement or enrolling individuals in the plan or arrangement or, when
initiated by an individual employee, assisting with the selection of investment
options offered by a single insurer in connection with enrolling that
individual employee.
(e) Registered
contracts shall be exempt from the requirements of N.JA.C. 11:4-2.4(a)3 and
2.6(a)2 with respect to the providing of illustrations or policy summaries;
however, in lieu of providing such illustrations of policy summaries, premium
or contract contribution amounts and identification of the appropriate
prospectus or offering circular shall be provided on such contracts.
