11 CRR-NY 40.3NY-CRR
11 CRR-NY 40.3
11 CRR-NY 40.3
40.3 Disclosure.
(a) An insurance company issuing a contract to which this Part applies is required, prior to the commitment by the contractholder to enter into the contract, to provide the plan sponsor (or persons representing the plan sponsor in the discussions with the insurance company) or, where no plan sponsor exists, the prospective contractholder (or persons representing the prospective contractholder in discussions with the insurance company), with a written statement and/or a specimen copy of the contract which contains all of the disclosures described in paragraphs (b)(1) through (13) of this section. If a specimen contract is provided, then a statement shall be supplied specifying where in the contract the disclosures referred to in paragraphs (b)(1), (3), (4), (5), (6), (9) and (10) of this section may be found. However, a written statement must be used in all situations with less than 50 eligible participants under each pension plan or governmental plan. If the group contract or funding agreement is issued to a trust participated in by two or more employers or employee organizations, then the trustee shall be provided with sufficient copies of the written statement for distribution to each participating employer or employee organization if there are less than 50 eligible employees of the employer or members of the employee organization.
(b) A written statement and/or contract referred to in subdivision (a) of this section shall contain the following information to the extent applicable:
(1) a statement indicating restrictions as to the amounts (whether minimum or maximum), and the timing of the contributions under the contract (as well as the grace period, if any, for any required contribution), and the duration of the contributions to be made to the insurance company under the contract, including, if applicable, a description of any charges or market value adjustments including liquidated damages which may become applicable, or a statement that the contract may be terminated or discontinued, in the event such contributions are not made in the amounts or on the dates specified;
(2) a description of the rights of the parties to a contract to cause the payment of contributions under the contract to be discontinued, including, if applicable, a description of any charges or market value adjustments including liquidated damages, or damages on termination or discontinuance of the contract which may result in the event the payment of contributions under the contract is discontinued or, if such charges or adjustments are not fully determinable at the commencement of the contract, a general description of the method to be used by the insurance company in determining such charges or adjustments;
(3) a statement of all current fees and charges that are or may be assessed directly to the contractholder or directly deducted by the insurance company from the accumulation fund including a description of the extent and frequency to which such fees and charges may be modified by the insurance company, and the extent to which such fees and charges may take precedence over any payments to be made by the insurance company under the contract;
(4) a statement of the interest rates to be credited by the insurance company to the accumulation fund, or if such interest rates are not fully determinable at the commencement of the contract, a general description of the method to be used by the insurance company in determining such interest rates stating, if applicable, that such interest rates are affected by the investment experience of the assets held in the insurance company's general account, and that the determination of such interest rates is subject to the insurance company's discretion together with a statement, describing how any withdrawals, transfers or payments will affect the amount of interest credited;
(5) a description of any expense, interest and benefit guarantees provided by the insurance company under the contract, including a description of the duration of such guarantees, and, if applicable, a description of the insurance company's right under the contract to modify or eliminate such guarantees, including the right in section 40.4(e) of this Part to apply surrender charges or market value adjustments to withdrawals used to pay plan benefits if there are plan amendments or changes in the manner in which the plan is administered that adversely affect the insurance company's rights or liabilities under the contract;
(6) a description of the rights which the contractholder and/or participants have to withdraw all or a portion of the accumulation fund (or to apply such withdrawn amounts to the purchase of guaranteed benefits or to the payment of benefits), and the terms under which such withdrawals or applications may be made including a description of any charges, fees or market value adjustments, both plus or minus, applicable to or occasioned by such withdrawals or applications, or if such charges, fees, or adjustments are not fully determinable at the commencement of the contract, a general description of the method to be used by the insurance company in determining same or a statement which discloses that no withdrawals or payments are permitted prior to the maturity of a guarantee or the happening of a certain event or events. If a full withdrawal by the contractholder is or may be paid by the insurance company in installments, the description must include:
(i) the duration of the installment period, or if such duration is not fully determinable at the commencement of the contract, a general description of the method to be used by the insurance company in determining such duration;
(ii) the amount, or method to be used by the insurance company in determining the amount of each installment payment and the effect of each such payment on the investment income credited to the accumulation fund;
(iii) the interest rates to be credited by the insurance company to the accumulation fund during the installment period, or if such interest rates are not fully determinable at the commencement of the contract, a general description of the method to be used by the insurance company in determining such interest rates; and
(iv) a statement whether a withdrawal to fund plan benefits is prohibited or restricted during the installment payout period;
(7) a statement indicating any pro rata, percentage or other limitations which may apply to benefit payments to be purchased or provided under the contract when the plan is not funded entirely under the contract;
(8) a statement is applicable, that contractholder or participant initiated withdrawals of all or a portion of the accumulation fund of the contract are to be made on a “first-in, first-out” (FIFO) or “last-in, first-out” (LIFO) basis or other applicable basis;
(9) a statement, if applicable, that the contract may be amended or the insurance company's contractual rights, if any, to unilaterally modify the terms of the contract without the consent of the contractholder, including amendments necessary to keep the contract in compliance with law;
(10) a statement, if applicable, indicating that the payment and amount of dividends or experience rate credits, if any, which may be payable by the insurance company under the contract, are subject to the insurance company's discretion;
(11) a statement, if applicable, that the duration of the assets supporting the contract's liabilities will affect the timing of withdrawals under the contract and that general information describing such assets and the amount of time it will take the contractholder to withdraw funds from the contract because of such assets, so affecting the timing of withdrawal rights, will be supplied by the insurance company upon the contractholder's request;
(12) a statement that the contractholder or plan sponsor (or the person who is negotiating the acquisition of the contract) is solely responsible for determining whether the contract is a suitable funding vehicle and should, therefore, carefully read the terms of the contract and the disclosure statement, if any, before entering into the contract; and
(13) a statement, if applicable, that the insurance company does not have the responsibility to reconcile participants' individual account balances with the accumulation fund balance where the insurance company does not maintain individual account balances.
(c) When contracts are submitted for approval, the superintendent may request the filing of the written disclosure statement referred to in subdivision (a) of this section.
11 CRR-NY 40.3
Current through July 31, 2021
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IMPORTANT NOTE REGARDING CONTENT CURRENCY: The "Current through" date indicated immediately above is the date of the most recently produced official NYCRR supplement covering this rule section. For later updates to this section, if any, please: consult editions of the NYS Register published after this date; or contact the NYS Department of State Division of Administrative Rules at [email protected]. See Help for additional information on the currency of this unofficial version of NYS Rules.