HB78 Alabama 2011 Session

Summary

Primary Sponsor

Gregory Canfield

Republican

Co-Sponsors

Joe FaustGreg WrenK.L. Brown

Session

Regular Session 2011

Title

Life insurance death benefits, Beneficiaries' Bill of Rights, established, disclosure, transparency, and accountability in payments

Summary

HB78 would create the Beneficiaries' Bill of Rights to require clear disclosure and transparency for life insurance death benefit payments, with rules on retained asset accounts and reporting.

What This Bill Does

Establishes a Beneficiaries' Bill of Rights that requires insurers to disclose all death benefit payment options and inform beneficiaries of their choices. Defines terms like POLICY and RETAINED ASSET ACCOUNT, and restricts using retained asset accounts unless beneficiaries are properly informed, including rights to a lump-sum bank-check payment. Requires detailed, plain-language descriptions of options, annual reporting by insurers to the Alabama Department of Insurance, and protects beneficiaries by making noncompliance a Deceptive Trade Practices violation; applies to claims filed after the effective date.

Who It Affects

• Beneficiaries of life insurance policies who would receive death benefits and gain clearer information and choices about how those benefits can be paid.
• Insurance companies and other entities that handle death-benefit payments, who must provide disclosures, manage retained asset accounts under restrictions, and report data to the Alabama Department of Insurance.

Key Provisions

• Creates the Beneficiaries' Bill of Rights and requires complete disclosure, transparency, and accountability for any method of paying life insurance death benefits.
• Defines key terms, including POLICY and RETAINED ASSET ACCOUNT, the latter being a way some benefits could be paid by depositing proceeds into an account kept by the insurer or its agent.
• Prohibits using a retained asset account as the settlement method without prior disclosure to the beneficiary; requires beneficiaries to be informed of the option to receive a lump-sum payment by bank check.
• Section 5 requires a full, plain-language description of all payment options before non-lump-sum payments are tendered, and for RAAs, mandates detailed information about taxes, interest, custodians, FDIC coverage, withdrawal limits, fees, statements, access methods, and contact information.
• Annual reporting to the Alabama Department of Insurance on retained asset accounts, including counts, balances, earnings, fees, interest rates, account durations, administrators, and unclaimed-property transfers; and immediate return of remaining balances when an account becomes inactive.
• Violations of the act are treated as Deceptive Trade Practices; applies to death-benefit claims submitted after the act’s effective date; excludes local-funds amendments and sets an effective date for the act.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance