H*3432 Session 107 (1987-1988)
H*3432(Rat #0357, Act #0342 of 1988) General Bill, By J.D. Bradley, Boan and
J.W. McLeod
Similar(S 977, S 1098)
A Bill to amend Section 38-69-120, Code of Laws of South Carolina, 1976,
relating to the incontestability of annuity contracts and the exceptions
thereto, so as to provide for the required contents of certain annuities and
endowment contracts; to amend Article 1, Chapter 69, Title 38, relating to
annuities by adding Section 38-69-30 so as to provide that when the proceeds
of an annuity becoming a claim by the death of the insured are left with an
insurance company under a trust or other agreement, the benefits accruing
thereunder after the death of the insured are not transferrable nor subject to
computation or incumbrance nor to legal process, except in an action to
recover for necessaries if the parties to the trust or other agreement so
agree, and to repeal Section 38-69-130 relating to limitations on proceedings
to contest certain annuity contracts.
12/21/87 House Prefiled
12/21/87 House Referred to Committee on Labor, Commerce and Industry
01/12/88 House Introduced and read first time HJ-286
01/12/88 House Referred to Committee on Labor, Commerce and
Industry HJ-286
01/27/88 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-676
02/04/88 House Amended HJ-969
02/04/88 House Read second time HJ-970
02/04/88 House Unanimous consent for third reading on next
legislative day HJ-970
02/05/88 House Read third time and sent to Senate HJ-979
02/09/88 Senate Introduced, read first time, placed on calendar
without reference SJ-14
02/11/88 Senate Read second time SJ-35
02/12/88 Senate Read third time and enrolled SJ-1
02/18/88 Ratified R 357
02/24/88 Signed By Governor
02/24/88 Effective date 01/01/89
02/24/88 Act No. 342
03/08/88 Copies available
(A342, R357, H3432)
AN ACT TO AMEND SECTION 38-69-120, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE INCONTESTABILITY OF ANNUITY CONTRACTS AND THE EXCEPTIONS THERETO,
SO AS TO PROVIDE FOR THE REQUIRED CONTENTS OF CERTAIN ANNUITIES AND ENDOUMENT
CONTRACTS; TO AMEND ARTICLE 1, CHAPTER 69, TITLE 38, RELATING TO ANNUITIES BY
ADDINC SECTION 38-69-30 SO AS TO PROVIDE THAT WHEN THE PROCEEDS OF AN ANNUITY
BECOMINC A CLAIM BY THE DEATH OF THE INSURED ARE LEFT WITH AN INSURANCE COMPANY
UNDER A TRUST OR OTHER AGREEMENT, THE BENEFITS ACCRUINC THEREUNDER AFTER THE
DEATH OF THE INSURED ARE NOT TRANSFERABLE NOR SUBJECT TO COMPUTATION OR
INCUMBRANCE NOR TO LEGAL PROCESS, EXCEPT IN AN ACTION TO RECOVER FOR NECESSARIES
IF THE PARTIES TO THE TRUST OR OTHER AGREEMENT SO AGREE, AND TO REPEAL SECTION
38-69-130 RELATING TO LIMITATIONS ON PROCEEDINGS TO CONTEST CERTAIN ANNUITY
CONTRACTS.
Be it enacted by the General Assembly of the State of South Carolina:
Contents of annuity and endowment contracts
SECTION 1. Section 38-69-120 of the 1976 Code is amended to read:
"Section 38-69-120. All fixed dollar annuities, variable annuities, pure
endowment contracts, or reversionary annuities other than group annuities
delivered or issued for delivery in this State must contain in substance the
following:
(1) a brief and correct description of its benefits on the lower portion of its
first page and an identifying form number on the lower left-hand corner of its
face;
(2) a provision stating clearly, understandably, and conspicuously on the first
page that the contract holder is permitted to return the contract within ten days
of its delivery to the contract holder. If replacement of an annuity contract is
involved, the contract holder is permitted to return the contract within twenty
days of its delivery to the contract holder. If the contract was solicited by a
direct response insurer rather than through a licensed insurance agent, the
provision must state that the contract holder is permitted to return the contract
within thirty-one days. The entire premium paid by the contract holder must be
returned immediately to the contract holder;
(3) a provision stating who is authorized by the insurer to waive, alter, or
change any of the terms or conditions of the contract. It may state also that no
aBent has the power or authority to waive, change, or alter any of the terms or
conditions of the policy;
(4) a provision that the contract and any rider or supplemental benefits
attached to the contract are incontestable as to the truth of the application for
insurance and to the representations of the insured individual after they have
been in force for two years from their date of issue. Any rider or supplemental
benefits attached subsequently to the contract are incontestable as to the truth
of the application for the rider or supplemental benefits and to the
representations of the insured individual after they have been in force for two
years from their date of issue. If an insurer institutes proceedings to vacate
a contract on the ground of the falsity of the representations contained in the
application for the contract, the proceedings must commence within the tlme
permitted in this subsection;
(5) a provision that if it is found that the age or sex of the insured, or of
any individual considered in determining the premium, has been misstated, any
amount payable or benefit accruing under the contract is that as the premium
would have purchased according to the correct age or sex;
(6) a provision stating how the beneficiary is designated and how the
beneficiary may be changed;
(7) there must be a provision stating the amount of premium and the time and
manner payable;
(8) a provision that the insured is entitled to a grace period of not less than
thirty-one days within which the payment of any premium after the first may be
made. During the grace period, the contract continues in full force. If a claim
arises under the contract during the grace period, the amount of any premium due
or overdue may be deducted from any amount payable under the contract in
settlement;
(9) a provision that the contract may be reinstated upon written application
at any time within three years from the date of default in making stipulated
payments to the insurer, unless the cash surrender value has been paid. However,
all overdue stipulated payments and indebtedness to the insurer on the contract
must be paid or reinstated with interest thereon at a rate to be specified in the
contract, but not exceeding eight percent a year compounded annually and, when
applicable, the insurer may include also a requirement of evidence of
insurability satisfactory to the insurer;
(10) a provision if the annuity contract is participating, that beginning not
later than the end of the third contract year, the insurer shall ascertain
annually and apportion any divisible surplus accruing on the contract;
(11) a provision that is in accordance with Article 5, Chapter 69, Title 38,
Standard Nonforfeiture Law for Individual Deferred Annuities.
The commissioner may approve contracts with provisions which vary from the
provisions required in this section if the provisions are more favorable to the
insured. Any of the provisions not applicable to single premium annuities,
flexible premium annuities, or single premium pure endowment contracts need not
be incorporated to that extent in the contract. This section does not apply to
contracts for annuities included in or upon the lives of beneficiaries under life
insurance contracts."
Proceeds of annuity under trust not subJect to legal process
SECTION 2. Article 1, Chapter 69, Title 38 of the 1976 Code is amended by
addin&:
"Section 38-69-30. When the proceeds of an annuity becoming a claim by the
death of the insured are left with an insurance company under a trust or other
agreement, the benefits accruing under the agreement after the death of the
insured are not transferable nor subject to computation or incumbrance nor to
legal process, except in an action to recover for necessaries if the parties to
the trust or other agreement so agree.
Section repealed
SECTION 3. Section 38-69-130 of the 1976 Code is repealed.
Time effective
SECTION 4. This act takes effect on January 1, 1989. |