Beneficiary of the Beneficiary provision
It has come to my attention through the post approval review process that there is a new position at the NYSID with respect to payouts.
The Department is requiring an endorsement of approved contracts, at least those picked up on post-approval review, to state what happens when the beneficiary also dies before guaranteed payments are all paid out. This issue apparently arose from consumers' questions and when told that it depends what the contract says and the Department looked to see what they did say, it was found that many say nothing. Questions arose regarding what would happen and whether the payments would go to the owner or the beneficiary's estate. To promote clarity, the Department began to require a contract provision on those it reviews.
Companies should take note because this is enforced not only on a going forward basis, but those companies who are subject to post-approval review are being required to endorse their in-force contracts to address this perceived ambiguity. There is nothing we can do about all the policies and contracts we have filed before we knew of this unpublished position - it will be up to each company to address the issue as it sees fit if it comes up on post-approval review - but for contracts being drafted now, this is a provision that should be included to avoid a comment and possible endorsement on the back-end.
