N.Y. ISC. LAW § 3230 : NY Code - Section 3230: Accelerated payment of the death benefit or special surrender value under a life insurance policy

Search N.Y. ISC. LAW § 3230 : NY Code - Section 3230: Accelerated payment of the death benefit or special surrender value under a life insurance policy

(a)  The  application  for  a  life  insurance  policy or policy rider which provides for accelerated payment
  of death benefits or a special surrender value shall:
    (1) contain a notice,  prominently  displayed,  to  read  as  follows:
  "Receipt of accelerated death benefits may affect eligibility for public
  assistance programs and may be taxable."; and
    (2) include  the  amount of any additional premium associated with the
  accelerated payment or, if there is no separately identifiable  premium,
  whether a discount is associated with acceleration.
    (b) The application to accelerate benefits shall:
    (1) be  dated  by  the insurer upon transmittal and shall be completed
  and signed by the policy owner not more than thirty days thereafter; and
    (2) contain a notice,  prominently  displayed,  to  read  as  follows:
  "Receipt of accelerated death benefits may affect eligibility for public
  assistance  programs  such  as  medical  assistance  (medicaid),  family
  assistance and supplemental  security  income.  Receipt  of  accelerated
  death  benefits  in  periodic  payments  may be treated differently than
  receipt in a lump sum. Prior to applying for accelerated death benefits,
  policyowners should consult with the appropriate social services  agency
  concerning  how  receipt  will  affect  the eligibility of the recipient
  and/or the recipient's spouse or dependents."
    (3) contain a notice,  prominently  displayed,  to  read  as  follows:
  "Receipt  of  accelerated  death  benefits  may  be  taxable. Receipt of
  accelerated  death  benefits  in  periodic  payments  may   be   treated
  differently  than  receipt  in  a  lump  sum. Prior to applying for such
  benefits, policy owners should seek  assistance  from  a  qualified  tax
  adviser."; and
    (4) contain  a  statement by the policy owner that such application is
  voluntary and without coercion on the part of any third party; and
    (5) contain a statement of the remaining death  benefit  available  to
  the beneficiary.
    (c) Insurers  are prohibited from paying accelerated death benefits or
  special surrender values to the policy owner or certificate holder for a
  period of fourteen days from the date on which the information specified
  in subdivision (d) of this section is  transmitted  in  writing  to  the
  policy  owner  or  certificate  holder.  The policy owner or certificate
  holder shall have the right to rescind the request for such payments  at
  any time during the process of application for said benefits.
    (d) Within  five  day  of  receipt  of  an  application  to accelerate
  benefits an insurer must provide the policy owner with the following:
    (1) an  illustration  demonstrating  the  effect  of  the  accelerated
  benefit on the policy's cash value and policy loans;
    (2) a  numerical  computation of the amount of the death benefit which
  would be payable upon death;
    (3) a numerical computation of the amount of the  death  benefit  that
  would be payable upon acceleration; and
    (4) a notice that other means may be available to achieve the intended
  goal, including a policy loan.
    (e) A  group  life  insurance  policy  which  provides for accelerated
  payment of death benefits or a special surrender value must provide that
  only the certificateholder has the right to accelerate the benefits.
    (f) This section shall apply to all life insurance policies or  policy
  riders  or  provisions  thereof  that provide for accelerated payment of
  death benefits or a special surrender  value  pursuant  to  subparagraph
  (A),  (B)  or  (C)  of  paragraph  one  of subsection (a) of section one
  thousand one hundred thirteen of this chapter.

    (g) Insurers issuing any life insurance policy or policy  rider  which
  provides  for accelerated payment of death benefits or special surrender
  value on the basis described in subparagraph (D)  of  paragraph  one  of
  subsection  (a)  of  section  one  thousand one hundred thirteen of this
  chapter  shall, with respect to any such life insurance policy or policy
  rider, conform to the requirements of paragraph four of  subsection  (b)
  and  subsection  (e)  of  this  section  and  to  all those requirements
  established by Section 4980C of the Internal Revenue Code for  qualified
  long-term care insurance carriers.