(a) (1) For an individual annuity contract subject to this article that is surrendered by the contract owner, the insurer shall return to the owner all moneys due in relation to that contract as expeditiously as possible but not later than 45 days from the date the surrender is effective as provided in subdivision (b).
(2) An insurer may defer payment of cash surrender value for up to six months if the approval described in subdivision (b) of Section 10168.1 has been received by the insurer.
(b) (1) (A) A surrender of a contract is effective on the date the request is received if the request is made to the insurer, or servicing agent authorized by the insurer in writing to receive requests for surrender on the insurer’s behalf, and contains the elements specified by the insurer in the contract.
(B) The effective date of the surrender of a contract may be up to 45 days after the request for surrender is received if it is permitted by the contract and requested by the contract owner.
(2) The insurer may require the request for surrender to be in writing.
(3) The elements the insurer may require as part of the request for surrender are limited to the following:
(A) A statement that makes it clear that the contract owner intends to surrender, in whole or in part, the contract in question.
(B) The contract number of the contract to be surrendered.
(C) The name, address, and telephone number of the contract owner on the contract to be surrendered.
(D) A clear method of delivery and payee instructions for payment of the surrender value.
(E) For partial surrender, the withdrawal amount, including requested beginning date, frequency, and maximum annual withdrawal amount, and instructions on subaccount withdrawals.
(F) Instructions for tax withholding.
(G) The signature of the owner of the contract, which may be either a wet signature or an electronic signature at the insurer’s discretion, and if required by the contract or by a legally binding document that the insurer has actual notice of, the signature of a collateral assignee, irrevocable beneficiary, or other person having an interest in the contract through the legally binding document.
(H) Either the contract itself, or, in lieu of the contract, a statement that the contract has been lost or destroyed.
(4) The insurer may require the contract owner to complete an administrative form as part of the surrender process. The insurer’s administrative form may only request information required to complete the surrender transaction, as set forth in paragraph (3). An administrative form shall be provided to the contract owner within two business days of the request, and shall be available for the contract owner to access on the insurer’s Internet Web site if the contract owner accesses his or her account information through the insurer’s Internet Web site. The insurer’s requirement to complete an administrative form shall not further the effective date of the surrender or extend the 45-day period in which the surrender is required to be processed.
(A) The administrative form shall be designed to provide the insurer with the information needed to complete the surrender transaction consistent with the contract owner’s request.
(B) If the insurer requires an administrative form and the contract owner completes and submits that form within 14 days of the surrender request, the insurer shall return all moneys due as expeditiously as possible but not later than 30 days from the effective date of the surrender.
(c) When the contract owner requests information about surrendering a contract from the insurer or servicing agent, the insurer or servicing agent shall provide, upon request, as expeditiously as possible, a written notice setting forth either the requirements of this section or the insurer’s requirements.
(d) A contract subject to this section shall do either of the following:
(1) Include language, which may be included by endorsement, setting forth the permitted requirements for surrender described in this section. Alternatively, if the insurer requires only some of the elements permitted in paragraph (3) of subdivision (b) for a surrender request, the contract language may exclude any of the elements in paragraph (3) of subdivision (b) that the insurer does not require to process the surrender.
(2) Be accompanied by a notice setting forth the permitted requirements for a surrender described in this section. Alternatively, if the insurer requires only some of the elements permitted in paragraph (3) of subdivision (b) for a surrender request, the notice may exclude any of the elements in paragraph (3) of subdivision (b) that the insurer does not require to process the surrender.
(e) (1) For a written request and for purposes of this section, “received” means the first day that the written notice is delivered to the address of the insurer or servicing agent authorized by the insurer in writing to receive requests for surrender on the insurer’s behalf.
(2) (A) An insurer or servicing agent shall maintain a procedure for ensuring that requests for surrender are logged or stamped on the date received and not on a later date due to the insurer’s or servicing agent’s internal routing or delivery procedures.
(B) If the procedure required pursuant to subparagraph (A) is not maintained, it shall be conclusively presumed that a request was received on the earliest of the following:
(i) The delivery date shown on an express, certified, or registered mail receipt form of the United States Postal Service or by a commercial carrier.
(ii) Two business days after the request was postmarked by the United States Postal Service.
(iii) One business day before the date stamped received by the insurer or servicing agent.
(C) For purposes of this paragraph, “business day” has the meaning set forth in subdivision (b) of Section 1215.
(D) Postmarks generated by postage meters not located at an office of the United States Postal Service are to be disregarded.
(f) (1) This section does not alter a contractual provision governing calculation of cash or surrender or other values, unless that contractual provision applies a valuation date other than the effective date of surrender described in subdivision (b) to the calculation of cash or surrender or other values.
(2) The effective date established by subdivision (b) is intended to establish a date certain on which a contract owner may rely in determining when the 45-day period specified in subdivision (a) begins to run and a date certain for the insurer to use for the valuation of the contract.
(3) Notwithstanding paragraph (3) of subdivision (b), an insurer may request information that is reasonably necessary to process the surrender in addition to that listed in subdivision (b). An insurer’s request for additional information does not delay an effective date established by a contract owner’s compliance with subdivision (b).
(4) An insurer may request a signature guarantee if there is reason to believe a fraudulent situation may occur.
(g) This section shall only apply to contracts issued on or after January 1, 2019.
(Added by Stats. 2017, Ch. 228, Sec. 1. (AB 1398) Effective January 1, 2018.)
Last modified: October 25, 2018