(a) Except as allowed in subdivision (c), an insurer may not issue or deliver a corporate-owned life insurance policy.

(b) “Corporate-owned life insurance policy” means a life insurance policy that is purchased by a California employer, that designates the employer as the beneficiary of the policy, and that insures the life of a California resident who is a current or former employee of the employer.

(c) This section does not apply to a policy insuring the life of a current or former exempt employee. An exempt employee is an administrative, executive, or professional employee who is exempt under Section 515 of the Labor Code and the regulations adopted pursuant thereto.

(d) Except as provided in subdivision (f), it is a violation of public policy for a California employer to purchase or hold a corporate-owned life insurance policy.

(e) (1) A corporate-owned life insurance policy purchased on or after the effective date of this section is void.

(2) Except as provided in subdivision (f), a corporate-owned life insurance policy purchased prior to the effective date of this section shall become void on the next premium payment date on or after the date five years from the effective date of this section, but no later than January 1, 2010.

(f) A corporate-owned life insurance policy purchased prior to the effective date of this section that insures the life of a current or former nonexempt employee shall continue in force after the effective date of this section provided that no further premium payments are made after the effective date of this section. However, an employer who has purchased and holds such a corporate-owned life insurance policy shall disclose in writing to the current or former nonexempt employee whose life is insured by the policy, within 90 days of the effective date of this section, all of the following information:

(1) The existence of the corporate-owned life insurance policy on the life of the nonexempt employee.

(2) The identity of the insurer under the policy.

(3) The benefit amount under the policy, unless the full amount of the benefit is used to defray the costs of nonexempt employee benefits.

(4) How benefits paid under the policy would be used.

(5) The name of the beneficiary under the policy.

(g) For a former employee, the disclosure requirements shall be deemed satisfied if the employer mails the required information to the former employee’s last known address.

(Added by Stats. 2003, Ch. 328, Sec. 2. Effective January 1, 2004.)