Current through Register Vol. 42, No. 5, February 29, 2024
(1) Descriptive
Title. The terminology "accelerated benefit" shall be included in the
descriptive title. Products regulated under this chapter shall not be described
or marketed as long-term care insurance or as providing long-term care
benefits.
(2) Tax Consequences. A
disclosure statement is required at the time of application for the policy or
rider and at the time the accelerated benefit payment request is submitted that
receipt of these accelerated benefits may be taxable and that assistance should
be sought from a personal tax advisor. The disclosure statement shall be
prominently displayed on the first page of the policy or rider and any other
related documents.
(3)
Solicitations.
(a) A written disclosure
including, but not necessarily limited to, a brief description of the
accelerated benefit and definitions of the conditions or occurrences triggering
payment of the benefits shall be given to the applicant. The description shall
include an explanation of any effect of the payment of a benefit on the
policy's cash value, accumulation account, death benefit, premium, policy loans
and policy liens.
1. In the case of agent
solicited insurance, the agent shall provide the disclosure form to the
applicant prior to or concurrently with the application. Acknowledgment of the
disclosure shall be signed by the applicant and writing agent.
2. In the case of a solicitation by direct
response methods, the insurer shall provide the disclosure form to the
applicant at the time the policy is delivered, with a notice that a full
premium refund shall be received if the policy is returned to the company
within a 30-day "free look" period.
3. In the case of group insurance policies,
the disclosure form shall be contained as part of the certificate of coverage
or any related document furnished by the insurer for the
certificateholder.
(b)
If there is a premium or cost of insurance charge, the insurer shall give the
applicant a generic illustration numerically demonstrating any effect of the
payment of a benefit on the policy's cash value, accumulation account, death
benefit, premium, policy loans and policy liens.
1. In the case of agent solicited insurance,
the agent shall provide the illustration to the applicant prior to or
concurrently with the application.
2. In the case of a solicitation by direct
response methods, the insurer shall provide the illustration to the applicant
at the time the policy is delivered.
3. In the case of group insurance policies,
the disclosure form shall be contained as part of the certificate of coverage
or any related document furnished by the insurer for the
certificateholder.
(c)
Disclosure of Premium Charge.
1. Insurers with
financing options other than as described in Rule
482-1-113-.11(1)(b) and
(c) of this chapter shall disclose to the
policyowner any premium or cost of insurance charge for the accelerated
benefit. These insurers shall make a reasonable effort to assure that the
certificateholder is aware of any additional premium or cost of insurance
charge if the certificateholder is required to pay such charge.
2. Insurers shall furnish an actuarial
demonstration to the state insurance department when filing the product
disclosing the method of arriving at their cost for the accelerated
benefit.
(d) Disclosure
of Administrative Expense Charge. The insurer shall disclose to the policyowner
or certificateholder any administrative expense charge. The insurer shall make
a reasonable effort to assure that the policyowner or certificateholder is
aware of any administrative expense charge if the policyowner or
certificateholder is required to pay such charge. Such administrative expense
charge may be as high as 5% of the accelerated benefit, but shall not exceed
$250.00 per accelerated benefit payment.
(4) Effect of the Benefit Payment. When a
policyowner or certificateholder requests an acceleration, the insurer shall
send a statement to the policyowner or certificateholder and irrevocable
beneficiary showing any effect that the payment of the accelerated benefit will
have on the policy's cash value, accumulation account, death benefit, premium,
policy loans and policy liens. The statement shall disclose that receipt of
accelerated benefit payments may adversely affect the recipient's eligibility
for Medicaid or other government benefits or entitlements. In addition, receipt
of an accelerated benefit payment may be taxable and assistance should be
sought from a personal tax advisor. When a previous disclosure statement
becomes invalid as a result of an acceleration of the death benefit, the
insurer shall send a revised disclosure statement to the policyowner or
certificateholder and irrevocable beneficiary. When the insurer agrees to
accelerate death benefits, the insurer shall issue an amended schedule page to
the policyholder or notify the certificateholder under a group policy to
reflect any new, reduced in-force face amount of the contract.
Author: Commissioner of Insurance
