On July 18, 2013 in a seminar with New York State Department of Financial Services (NYSDFS) Life Bureau staff held at the Empire State Plaza Convention Center, it was indicated that NYSDFS would not be waiting for IRS guidance on the recent U.S. Supreme court strike down of the Defense of Marriage Act (DOMA) as unconstitutional. Instead, it was indicated that they were discussing internally and planned to release guidance as soon as possible.
On Friday, the NYSDFS guidance was released. The guidance, which can be found here, withdraws Supplement No. 1 to Circular Letter 27 (2008) (“Supplement No. 1”).
The guidance requires in-force contracts that currently have the disclosure required by Supplement No. 1 and/or a different default distribution option for same-sex spouses to be endorsed before October 31, 2013 by a form approved by the Life Bureau.
For new issues, Supplement No. 1 had two specific form requirements, each of which must be remedied before September 16, 2013:
If the disclosure was provided via endorsement or was bracketed on the forms, insurers should immediately stop issuing the endorsement or remove the disclosure from the forms for new issues. If the company would like to use different disclosure rather than just removing the existing disclosure, a revised memorandum of variable material must be submitted for approval.
If the disclosure was included on the forms and was not bracketed, then a revised policy form with a new form number must be submitted for approval.
Default Distribution Option
If the form provided for a different default distribution option depending on whether the beneficiary was a same-sex spouse or an opposite-sex spouse, then a revised policy form with a new form number will need to be submitted for approval.
Companies can use the Circular Letter No. 6 (2004) process to submit these forms. However, if the company would like to provide a new disclosure then the form must be submitted for prior review unless the Department has reviewed the new disclosure and given permission to use the certified process. An expedited prior approval process is available so long as the only changes made are a result of the withdrawal of Supplement No. 1. If additional changes are made to the forms, the expedited process will not be available. The guidance provides specific procedural requirements to use the expedited process.