1Providing for the Consumer Education in Small Face Amount Life
2Insurance Policies Act.

3The General Assembly of the Commonwealth of Pennsylvania
4hereby enacts as follows:

5Section 1. Short title.

6This act shall be known and may be cited as the Consumer
7Education in Small Face Amount Life Insurance Policies Act.

8Section 2. Purpose.

9The purpose of this act is to establish rules that ensure
10meaningful information is provided to the purchasers of small
11face amount policies.

12Section 3. Definitions.

13The following words and phrases when used in this act shall
14have the meanings given to them in this section unless the
15context clearly indicates otherwise:

16"Insurance producer." A person required to be licensed under
17the laws of this Commonwealth to sell, solicit or negotiate
18insurance, including annuities.

1"Small face amount policy." A life insurance policy or
2certificate with an initial face amount of $15,000 or less.

3Section 4. Disclosure requirements.

4(a) Length of time.--An insurer issuing a small face amount
5policy, where over the term of the policy the cumulative policy
6premiums paid may exceed the face amount of the policy, shall
7clearly and prominently disclose, on or before policy delivery,
8the length of time until the cumulative policy premiums paid may
9exceed the face amount of the policy.

10(b) Alternatives.--If an insurer is required to provide a
11disclosure under subsection (a), the insurer shall clearly and
12prominently disclose, on or before policy delivery, available
13premium payment plan and product alternatives. If no
14alternatives exist, the insurer shall clearly and prominently
15disclose that there are no alternatives.

16(c) Free look period.--A policy subject to the disclosure
17requirements of this section shall contain a provision allowing
18the policyholder to cancel the policy within ten days following
19the delivery of the policy with full premium refund to the
20consumer and with no charge or penalty. The free look period
21shall be clearly and prominently disclosed to the consumer.

22Section 5. Cumulative premiums.

23Cumulative premiums shall include premiums paid for riders.
24The face amount, however, shall not include the benefit
25attributable to the riders.

26Section 6. Insurer duties.

27The insurer and its producers shall have a duty to provide
28information to policyholders or certificate holders that ask
29questions about the disclosure statement.

30Section 7. Applicability.

1The provisions of this act shall apply to group and
2individual life insurance policies and certificates except:

3(1) variable life insurance;

4(2) individual and group annuity contracts;

5(3) credit life insurance;

6(4) policies and certificates where an illustration has
7been provided under the requirements of Article IV-A of the
8act of May 17, 1921 (P.L.682, No.284), known as The Insurance
9Company Law of 1921; or

10(5) group or individual policies of life insurance
11issued to members of an employer group or other permitted
12group where:

13(i) Every plan of coverage was selected by the
14employer or other group representative.

15(ii) Some portion of the premium is paid by the
16group or through payroll deduction.

17(iii) Group underwriting or simplified underwriting
18is used.

19Section 20. Effective date.

20This act shall take effect in 60 days.