Code of Maryland Regulations
Title 31 - MARYLAND INSURANCE ADMINISTRATION
Subtitle 09 - LIFE INSURANCE AND ANNUITIES
Chapter 31.09.16 - Accelerated Benefits
Section 31.09.16.07 - Disclosures
Universal Citation: MD Code Reg 31.09.16.07
Current through Register Vol. 51, No. 19, September 20, 2024
A. Descriptive Title.
(1) The insurer shall include the term "accelerated benefit" in the policy or rider's title.
(2) An accelerated benefit product being offered under this chapter may not be described or marketed as long-term care insurance or as providing long-term care benefits.
B. Disclosure of Tax Consequences.
(1) A written disclosure stating that receipt of the accelerated benefits may be taxable and assistance should be sought from a personal tax advisor shall be provided by the insurer at the time of application for the policy or rider, and at the time the accelerated benefit payment request is submitted.
(2) The disclosure statement issued by the insurer required by § B(l) of this regulation shall be prominently displayed on the first page of the policy or rider and on the first page of any other related documents.
C. Solicitations.
(1) A written disclosure including, but not 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 as follows:
(a) The description shall include an explanation of any effect the payment of a benefit would have on the policy's cash value, accumulation account, death benefit, premium, policy loans, and policy liens;
(b) For agent solicited insurance, the agent shall provide the disclosure form to the applicant as follows:
(i) This form shall be provided by the agent prior to or concurrently with the application; and
(ii) The acknowledgment of the disclosure form shall be signed by the applicant and writing agent;
(c) For solicitations by direct response, 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 insurer within the free look period; and
(d) For group insurance, the disclosure form shall be contained as part of the certificate of coverage or any other related document furnished by the insurer for the certificate holder.
(2) 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 as follows:
(a) For agent solicited insurance, the agent shall provide the illustration to the applicant prior to or concurrently with the application; or
(b) For solicitations by direct response, the insurer shall provide the illustration to the applicant at the time the policy is delivered.
(3) Disclosure of Premium Charge.
(a) The insurer with financing options other than as described in Regulation .11A(2) and (3) of this chapter shall disclose to the policy owner any premium or cost of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort to assure that the certificate holder is aware of any additional premium or cost of insurance charge if the certificate holder is required to pay a charge.
(b) The insurer shall furnish an actuarial demonstration to the Commissioner when filing the product which discloses the method the insurer used to arrive at the cost for the accelerated benefit.
(4) Disclosure of Administrative Expense Charge.
(a) The insurer shall disclose to the policy owner any administrative expense charge provided in the policy. The administrative expense charge shall be disclosed in the written disclosure required by §C(1) of this regulation and in the statement required by §D(1) of this regulation.
(b) The insurer shall make a reasonable effort to assure that the certificate holder is aware of any administrative expense charge if the certificate holder is required to pay this charge.
D. Effect of the Benefit Payment.
(1) When a policy owner or certificate holder requests an acceleration, the insurer shall send a statement to the policy owner or certificate holder and irrevocable beneficiary that:
(a) Illustrates 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;
(b) Discloses that receipt of accelerated benefit payments may adversely affect the recipient's eligibility for Medicaid or other government benefits or entitlements; and
(c) Discloses that receipt of an accelerated benefit payment may be taxable and assistance should be sought from a personal tax advisor.
(2) 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 policy owner or certificate holder and irrevocable beneficiary.
(3) When the insurer agrees to accelerate death benefits, the insurer shall issue an amended schedule page to the policy holder or notify the certificate holder under a group policy to reflect any new, reduced in-force face amount of the contract.
Disclaimer: These regulations may not be the most recent version. Maryland may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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