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 agent 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 time 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 director or his designee 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.
HISTORY: Former 1976 Code Section 38-9-250 [1947 (45) 322; 1950 (46) 2041; 1952 Code Section 37-161; 1962 Code Section 37-161] recodified as Section 38-69-120 by 1987 Act No. 155, Section 1; 1988 Act No. 341, Section 1; 1993 Act No. 181, Section 741.