| 1 | A bill to be entitled |
| 2 | An act relating to annuity contracts for senior consumers; |
| 3 | creating s. 627.45545, F.S.; providing a short title; |
| 4 | providing legislative findings; providing definitions; |
| 5 | specifying annuity contract protection criteria for senior |
| 6 | consumers; providing an effective date. |
| 7 |
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| 8 | Be It Enacted by the Legislature of the State of Florida: |
| 9 |
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| 10 | Section 1. Section 627.45545, Florida Statutes, is created |
| 11 | to read: |
| 12 | 627.45545 Senior annuity protections.-- |
| 13 | (1) This section may be cited as the "Florida Senior |
| 14 | Annuity Bill of Rights." |
| 15 | (2) The Legislature finds that equity indexed, fixed |
| 16 | equity indexed, and indexed annuities are substantially similar |
| 17 | in complexity to securities and should therefore be regulated as |
| 18 | securities relative to setting appropriate consumer protections |
| 19 | and agent training. Agents who sell equity indexed, fixed equity |
| 20 | indexed, and indexed annuities should be required to have the |
| 21 | same license as that required to sell securities under chapter |
| 22 | 517. |
| 23 | (3) As used in this section, the term: |
| 24 | (a) "Annuity contract" means a fixed annuity, equity |
| 25 | indexed annuity, fixed equity indexed annuity, indexed annuity, |
| 26 | or variable annuity that is individually solicited, whether the |
| 27 | product is classified as an individual annuity or group annuity. |
| 28 | (b) "Equity indexed annuity," "fixed equity indexed |
| 29 | annuity," or "indexed annuity" means a fixed annuity that earns |
| 30 | interest or provides benefits that are linked to an external |
| 31 | equity reference or an equity index. |
| 32 | (c) "Purchase payment" means any amount paid to the |
| 33 | insurer under an annuity contract as consideration for the |
| 34 | benefits provided by the contract. |
| 35 | (d) "Senior consumer" means a person 65 years of age or |
| 36 | older. In the event of a joint purchase by more than one party, |
| 37 | a purchase is considered to be made by a senior consumer if any |
| 38 | party is age 65 or older. |
| 39 | (e) "Surrender charge" means any charge levied against the |
| 40 | purchase payments for withdrawal of the purchase payment prior |
| 41 | to the expiration of the surrender charge period. |
| 42 | (f) "Surrender charge percentage" means the percentage of |
| 43 | the purchase payments that the contract holder will forfeit for |
| 44 | withdrawal of the purchase payment prior to the expiration of |
| 45 | the surrender charge period. |
| 46 | (g) "Surrender charge period" means the number of years |
| 47 | before purchase payments of the annuity contract may be |
| 48 | withdrawn without penalty. |
| 49 | (4) The following protections shall be incorporated into |
| 50 | any annuity contract purchased by an individual who, at the time |
| 51 | of purchase, is a senior consumer: |
| 52 | (a) The maximum surrender charge period shall be 9 years |
| 53 | from the date of each purchase payment. |
| 54 | (b) The maximum annual surrender charge percentage shall |
| 55 | be 9 percent of the purchase payments. |
| 56 | (c) After the first contract year, senior consumers shall |
| 57 | be allowed free annual withdrawals in each contract year of up |
| 58 | to 10 percent of the purchase payments for annuity contracts |
| 59 | with a surrender charge period of 7 years or longer. The insurer |
| 60 | may also specify in the contract that a senior consumer may take |
| 61 | a free annual withdrawal in an amount greater than 10 percent in |
| 62 | such contract, but in no event may the amount be less than 10 |
| 63 | percent. |
| 64 | (d) Senior consumers diagnosed with a terminal illness |
| 65 | that will result in death within 2 years after the diagnosis may |
| 66 | withdraw all purchase payments from an annuity contract prior to |
| 67 | the expiration of the surrender charge period without penalty. |
| 68 | Section 2. This act shall take effect January 1, 2010. |