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An Act To Protect Life Insurance Beneficiaries
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  24-A MRSA §2557  is enacted to read:
§ 2557. Notification prior to payment of benefits to beneficiary
Prior to the payment of any benefits under a life insurance policy to a beneficiary following the death of an insured, an insurer shall provide the following notices to the beneficiary.
 
1.  Right to elect full payment.     The insurer shall provide notice that the beneficiary has the right to elect full payment of any benefits due as a lump sum.
 
2.  Terms and conditions of benefits held for beneficiary.     If a beneficiary may elect that benefits be held in trust by the insurer, the insurer shall provide notice to the beneficiary of the terms and conditions for holding the benefits in trust, including, but not limited to, whether interest will be paid on benefits that remain in trust and whether amounts held in trust are protected from loss by insurance or other means.
 
SUMMARY
This bill requires that, prior to the payment of any benefits, an insurer notify a beneficiary entitled to benefits following the death of an insured under a life insurance policy that the beneficiary has the right to elect payment of the death benefits in a lump sum and, if the beneficiary may elect that the insurer hold the benefits in trust, what the terms and conditions are for holding the benefits in trust.