ASSEMBLY, No. 923

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblyman ROCCO

An Act requiring interest on the payment of proceeds under certain life insurance policies, amending and supplementing Title 17B of the New Jersey Statutes.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. N.J.S.17B:25-11 is amended to read as follows:

    17B:25-11. There shall be a provision that when benefits under the policy shall become payable by reason of the death of the insured, settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy or proof of the interest of the claimant or both. If an insurer shall specify a particular period prior to the expiration of which settlement shall be made, such period shall not exceed 2 months from the receipt of such proofs.

    Notwithstanding any policy provision to the contrary, there shall be a further provision stating that interest shall be payable on the benefits under the policy which become payable by reason of the death of the insured and shall accrue from the date the insurer receives notification of the death of the insured. Interest shall be calculated as prescribed in the Rules Governing the Courts of the State of New Jersey for judgments, awards and orders for the payment of money.

(cf: N.J.S.17B:25-11)

    2. N.J.S.17B:27-10 is amended to read as follows:

    17B:27-10. No policy of group life insurance shall be delivered or issued for delivery in this State unless it contains in substance the following provisions in [sections] N.J.S.17B:27-11 to 17B:27-21, inclusive, and section 3 of P.L. , c. (C. ) (pending in the Legislature as this bill), provided, however, a. [that sections] N.J.S.17B:27-17 to 17B:27-21, inclusive, shall not apply to policies issued in accordance with [section] N.J.S.17B:27-3, but [sections] N.J.S.17B:27-22 and 23 shall be applicable to such policies, and that [sections] N.J.S.17B:27-19 to 17B:27-21, inclusive, shall not apply to policies issued in accordance with [section] N.J.S.17B:27-7; b. that the provisions required for individual life insurance policies shall not apply to group life insurance policies; and c. that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which in the opinion of the commissioner is or are equitable to the insured persons and to the policyholder, but nothing herein shall be construed to require that group life insurance policies contain the same form of nonforfeiture provisions as are required for individual life insurance policies. Any policy of group life insurance may be delivered in this State which in the opinion of the commissioner contains provisions as favorable to the persons insured and to the policyholder as the following provisions and may be issued by any insurer of this State for delivery outside of this State when containing provisions in addition to or differing from the following provisions; provided, such policy conforms to the laws of the State or country in which it is delivered.

(cf: N.J.S.17B:27-10)

    3. (New section) Notwithstanding any policy provision to the contrary, there shall be a provision stating that interest shall be payable on the benefits under any policy of group life insurance which become payable by reason of the death of the insured and shall accrue from the date the insurer receives notification of the death of the insured. Interest shall be calculated as prescribed in the Rules Governing the Courts of the State of New Jersey for Judgments, awards and orders for the payment of money.

    4. This act shall take effect immediately.

STATEMENT

    This bill requires an insurer to pay interest on the proceeds payable under an individual or group life insurance policy. The bill provides that interest shall accrue from the date the insurer receives notification of the death of the insured and shall be calculated as prescribed in the Rules Governing the Courts of the State of New Jersey for judgments, awards and orders for the payment of money. Under current law there is no such requirement and insurers differ as to their treatment of the payment of interest.

Concerns accrual of interest on life insurance proceeds.