Current through Register Vol. 43, No. 39, September 26, 2024
(a) Long-term care
insurance policies shall return the following to policyholders in the form of
aggregate benefits under the policy:
(1) At
least 65 percent of the aggregate amount of premiums earned in the case of
group policies; and
(2) at least
60 percent of the aggregate amount of premiums earned in the case of individual
policies.
(b)
Subsection (a) of this regulation shall not apply to the following policies:
(1) Any long-term care policy or certificate
issued in this state on or after January 1, 2003; and
(2) certficates issued on or after January 1,
2003 under group long-term care insurance policy as defined in
K.S.A.
40-2227(e), and amendments
thereto, if the policy was in force at the time this amended regulation became
effective. Subsection (a) of this regulation shall not apply to the policy
anniversary following 12 months after January 1, 2003.
(c) Insurers shall determine aggregate
benefits returned under the policy on the basis of incurred claims experience
and earned premiums for the entire period for which rates are computed, in
accordance with accepted actuarial principles and practices.
(d) Long-term care benefits provided through
the acceleration of the death benefit under a life insurance policy or annuity,
if the payment of the long-term care benefits does not result in the decrease
of the total amount of benefits payable under the policy, shall be subject to
the following requirements in lieu of subsection (a), (b), or (c) of this
regulation:
(1) The separately identifiable
charge for the acceleration benefit shall not be excessive and shall meet
either of the following criteria:
(A) Be a
permanent and guaranteed charge; or
(B) have a guaranteed maximum cost that can
never be increased.
(2)
At the time of policy form filing, the insurer shall file a cost disclosure
illustration with the insurance department.
(A) The cost disclosure illustration shall
state separately the charges for the life insurance policy and for the
accelerated death benefit provision provided for either in the policy or by
rider, and the method of application of those charges.
(B) If the separately identifiable charge is
illustrated as a percentage, the value or policy feature against which the
percentage is to be applied shall also be disclosed.
(C) The cost disclosure illustration shall
clearly state whether the accelerated death benefit provision is offered either
as a permanent and guaranteed charge or with a guaranteed maximum cost. In
policies offering a guaranteed maximum cost, the exact figure of the guaranteed
maximum cost shall be clearly and unambiguously disclosed.
(3) At the time of delivery of the
outline of coverage, a cost disclosure illustration identical to or
substantially similar to that filed with the insurance department shall be
delivered to the prospective applicant for review. The cost disclosure
illustration shall include all the information required to be filed with the
insurance department as set out in paragraphs (2)(A) and (B) of this
subsection.
(4) The provisions of
paragraphs (1)(A) and (B) shall not apply to and shall have no effect upon the
underlying mortality costs and calculations that make up the basic premium for
the life insurance policy itself.
(5) In the case of a single premium life
insurance policy or annuity providing long-term care benefits via acceleration
of the death benefit, the loss ratio requirements of this regulation shall be
satisfied if the following conditions are met:
(A) Long-term care benefits are not
separately terminated.
(B) At the
time of policy form filing, the insurer files a benefit-to-premium
illustration, relating cash values to premiums over a 15-year period of time,
that is certified as appropriate by a member of the American academy of
actuaries using the following assumptions:
(i) Mortality costs according to the
appropriate percentage of the 1975-80 select and ultimate mortality tables as
annually determined by the society of actuaries;
(ii) cash values calculated using minimum
guaranteed interest and maximum total mortality and morbidity charges;
(iii) minimum reserves; and
(iv) lapses as follows:
1st year 20%
2nd year 15%
3rd year 13%
4th year 10%
5th year 8%
6th year through 14th year 7%
15th year 100%
The resulting benefit-to-premium ratio shall, in the aggregate,
not be less than 75% when based upon an expected distribution of insureds for
the age range for which the policy is issued.
(6) At the time of delivery of the
single premium life policy or annuity, the insurer shall provide the
policyholder with a cost disclosure setting out the year-by-year cash value
increases on both a guaranteed and projected basis using current assumptions,
for at least 20 years if any, and the total gross premium. The illustration
shall include the following, clearly and unambiguously:
(A) A statement that specifies that the
long-term care accelerated death benefit is an integral part of the policy or
annuity and shall not be separately terminated;
(B) a statement of the maximum total charge
for mortality and long-term care accelerated death benefit and the method of
application of that charge; and
(C) a statement that the maximum total charge
includes a charge for a long-term care accelerated death benefit.
