(a)
Descriptive title. The face
of every accelerated benefits policy shall contain the following:
(1) a description of coverage which uses the
terminology "accelerated";
(2) the
following statement: "Benefits as specified under this policy will be reduced
upon receipt of an accelerated benefit."
Accelerated benefits products shall not be described or
marketed as long-term care insurance or as providing long-term care
benefits.
(b)
Tax consequences. Disclosure is required, at the time of
application and at the time the accelerated benefits payment request is
submitted, of the potential tax implications of receiving this payout. The
disclosure statement shall indicate the extent to which the receipt of
accelerated benefits may be taxable and that the insured should seek assistance
from his personal tax advisor. Such disclosure shall be prominently displayed
on the first page of the policy or rider in bold-face type or contrasting
color.
(c)
Solicitations.
(1) Prior to or
concurrent with the application, the applicant shall be given a written
disclosure including, but not limited to, a brief description of the
accelerated benefit, the effect of the payment of an accelerated benefit on the
policy's cash value, death benefit, premium, policy loans and policy liens, and
definitions of the conditions or occurrences triggering payment of the
accelerated benefits. In the event of direct mail solicitation, the disclosure
shall be made upon acceptance of the application.
(2) The insurer shall disclose in its
solicitation any separate identifiable premium for the accelerated benefit.
Those insurers indicating that this accelerated benefit is offered without
additional premium shall furnish a written explanation to the Commissioner when
filing the product for approval.
(3) Prior to or concurrent with the request
for accelerated death benefits, the applicant shall be given an illustration
demonstrating the effect of the payment of an accelerated benefit on the
policy's cash value, death benefit, premium, policy loans and policy
liens.
(4) The insurer shall file
with the Commissioner the information concerning the manner by which the
actuarial discount and mortality charge, if any, is calculated for the
accelerated benefit. The Commissioner, if he determines that such discount or
mortality charge is excessive, shall hold a hearing to determine such
reasonable charges.
(5) Any life
insurance policy or any certificate, rider or endorsement thereto which
provides accelerated benefits pursuant to the occurrence of a qualifying event
as defined in section
38a-457-1(c)
(3) shall contain the following statement printed in a conspicuous and readily
discernable manner: "This policy is not a long-term care policy as defined in
Sections
38a-501
and
38a-528
of the Connecticut General Statutes."
(6) Ten-day free look. Any accelerated
benefits rider which provides for any additional premium payments with an
effective date subsequent to the effective date of the life insurance policy
shall have printed thereon or attached thereto a notice stating, in substance,
that the accelerated benefits rider may be returned by the insured for
cancellation by delivering or mailing the rider to the insurer or to the
producer through whom it was effected, at any time within ten days after
receipt of the rider by the insured, and that upon the delivery or mailing the
rider shall be void ab initio.
(7)
Effect of the benefit payment. When a policyowner or certificateholder requests
an acceleration, the insurer shall send a statement to the policyowner or
certificateholder, assignee 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 what adverse affect, if any, the actual or
constructive receipt of accelerated benefit payments may have on the
recipient's eligibility for Medicaid or other government benefits or
entitlements. 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, assignee and
irrevocable beneficiary. When the insurer agrees to accelerate death benefits,
the insurer shall issue a new or amended schedule page to the policy to reflect
any new, reduced in-force face amount of the contract.