408:11 Interest Payment on Claims for Death Benefits. –
I. Any policy or contract containing a death benefit shall contain a provision for the payment of interest on the death benefit, as follows:
(a) Interest shall accrue and be payable from the date of death.
(b) Interest shall accrue at the rate or rates applicable to the policy for funds left on deposit or, if the company has not established a rate for funds left on deposit, at the Two Year Treasury Constant Maturity Rate as published by the Federal Reserve. In determining the effective annual rate or rates, the company shall use the rate in effect on the date of death.
(c) Interest shall accrue at the effective annual rate determined in subparagraph (b), plus additional interest at a rate of 10 percent annually, beginning with the date that is 31 calendar days from the latest of dates identified in subparagraph (1) or (2), to the date the claim is paid, where it is:
(1) The date that due proof of death is received by the company; or
(2) The date the company receives sufficient information to determine its liability, the extent of the liability, and the beneficiary legally entitled to the proceeds.
II. The insurer has a duty to pay all claims in a timely manner. Nothing in this section shall be construed to allow any life insurance company doing business in this state to withhold payment of money payable under a life insurance policy or annuity contract death benefit to any beneficiary for a period longer than reasonably necessary to transmit such payment.
III. In any case in which interest on the proceeds of, or payments under, any individual or group policy of life insurance or annuity contract death benefit becomes payable pursuant to paragraph I, the insurer shall notify each named beneficiary at the last known address, as evidenced by the business records of the insurer, that interest will be paid on the proceeds of, or payments under, such policy from the date of death of the named insured, if the company does not pay the proceeds of, or payments under, the policy within 30 days of the insured's death. Such notice shall specify the rate of interest to be paid.