Current through Register 1531, September 27, 2024
(1)
Conditions Excluded from Life Policy. Notwithstanding
any provision of
211 CMR 55.00 to the
contrary, nothing contained herein shall be construed to require benefits under
an accelerated death benefit product based upon the
occurrenceofaconditionordisease which is specifically excluded from the
underlying life insurance policy.
(2)
Pre-existing
Conditions. Life insurance policies with accelerated benefit
provisions and annuity contracts with a waiver of surrender charges for the
early withdrawal of annuity proceeds may not contain any pre-existing condition
exclusion provisions; nor may such products contain an incontestabilityclause
which differs in duration or, if not added after issuance ofthe
underlyingpolicy, has an effective date different from any such clause
contained in the total and permanent disability provision, if any, of the
underlying life insurance policy or annuity contract.
(3)
Evidence of Total and
Permanent Disability.
(a) A
carrier may require that reasonable additional evidence be provided that the
insured is totally and permanently disabled as defined in
211 CMR
55.04.
(b) For the purposes of 211 CMR 55.05(3)(a),
"reasonable additional evidence" means:
1.
additional certification at the carrier's expense, by a physician, or, at the
option of the carrier in the case of a Chronic Illness, by a licensed health
care practitioner, who is not a member ofthe policyholder's or insured's
immediate family and who is not associated with or in any way affiliated with
the provider rendering the services in question;
2. a finding by the Social Security
Administration entitling the insured to disability benefits;
3. a finding of eligibility of total and
permanent disability by an Industrial Accident Board or similar agency under a
worker's compensation system; or
4.
a disability determination enabling an insured to make an early withdrawal from
an individual retirement account or similar instrument without penalty from the
Internal Revenue Service; or
5. any
other evidence approved by the commissioner.
(4)
Effective Date ofAccelerated
Benefit Provision. The accelerated benefit provision for
qualifying events due to accidental injury shall be effective on the effective
date of the policy or rider. The accelerated benefit provision in the case of
qualifying events not due to accidental injury shall be effective no more than
30 days following the effective date of the policy or rider unless the insured
has chosen an elimination period or deductible amount for policies providing
accelerated benefits for conditions for Chronic Illness only.
(5)
Method of Payment of
Accelerated Benefits or Annuity Proceeds.
(a) The policy or annuity contract must
specify all possible payment options.
(b) A policyholder may not be required to
specify which type of option to exercise until the time of a qualifying event,
except in cases that the individual qualifies for benefits only because of
Chronic Illness, or in cases when the policy provides benefits only for Chronic
Illness.
(c) The carrier shall give
the policyholder the option to receive the full amount of the accelerated
benefitor early withdrawal of the annuity proceeds available as a lump sum, in
addition to any other methods of payment offered except in cases that the
individual qualifies for benefits because of Chronic Illness only, or in cases
when the policy provides benefits for Chronic Illness only.
(d) In no event may the benefit be made
available as an annuity contingent upon the life of the insured.
(6)
Benefits Other
Than Accelerated Benefits. A carrier offering policies providing
benefits for conditions of Chronic Illness only may also provide Special
Benefits over and above the accelerated benefits or waiver ofsurrender charges
to be payable for expenses incurred for Qualified Long-Term Care
Services.
(7)
Restrictions on Use of Proceeds.
(a) No carrier may restrict the use of
accelerated benefits or the early withdrawal of the annuity proceeds in any
way; nor may any carrier attempt to recoup allor anyportionofbenefits paid out
under an accelerated benefit product, except in contestable cases of material
misrepresentation, fraud or criminal misconduct.
(b) Notwithstanding 211 CMR 55.05(7)(a), in
cases that the individual qualifies for benefits because of Chronic Illness
only, the benefit amount shall be payable only for expenses incurred for
Qualified Long-Term Care Services.
(8)
Waiver of Premium in
Accelerated Benefit Products.
(a) If a policyholder elects to accelerate
the full amount of the death benefit, whether as a lump sum or in periodic
payments, future premium payments on the underlying life insurance policy shall
be waived, without the inclusion of a waiver of premium rider.
(b) If a policyholder accelerates any amount
less than the full amount of the death benefit, whether as a lump sum or in
periodic payments, carriers are not required to waive future premium payments
on the remaining in-force life insurance policy unless the policy already
contains a waiver of premium provision that applies.
(9)
Additional
Premium.
(a) The carrier may
require a separate premium charge for anaccelerated benefit product or for a
provision allowing for the waiverof surrender charges for early withdrawals on
annuity proceeds.
(b) Those
carriers proposing to offer an accelerated benefit or a waiver of a surrender
charge for early withdrawals on annuity proceeds for additional premium shall
furnish an actuarial memorandum to the Commissioner when filing the
product.
(10)
Effect on Cash Value.
(a) When an accelerated benefit is payable or
there is a waiver of surrender charge for an early withdrawalofannuityproceeds,
there shall be no more than a pro-rata reduction in the cashvalue based on the
percentage of the death benefit accelerated to produce the accelerated benefit
payment or the early withdrawal in relation to the annuity proceeds.
(b) Alternatively, the payment of accelerated
benefits or waiver of surrender charge for an early withdrawal of annuity
proceeds, and any reasonable administrative expense charges, any future
premiums and any accrued interest may be considered a lien against the death
benefit or annuity proceeds of the underlying policy or rider, and the access
to the cash value may be restricted to any excess of the cash value over the
sum of any other outstanding loans and the lien. Future access to additional
policy loans may be limited to any excess of the cash value over the sum of the
lien and any other outstanding policy loans.
(11)
Effect on Any Outstanding
Policy Loans. If and when an accelerated benefit payment or early
withdrawal of annuity proceeds with a waiver of surrender charge causes a pro
rata reduction in the cash value of the underlying insurance policy or annuity,
at the option of the policyholder, the payment may first be applied toward
repaying all or a portion of any outstanding policy loan.
(12)
Effect on Death Benefit for
Certain Products. For accelerated benefit products and annuities
requiring no additional premium payments, the death benefit may not be reduced
by more than the amount of the accelerated benefits paid or the annuity may not
be reduced by more than the amount of the early withdrawal for which surrender
charges were waived in either case adjusted for any applicable actuarial
discount, accrued interest appropriate to the policy design, or for any
reasonable administrative expense charge.
(13)
Effect on Accidental Death
Benefit.
(a) If any death benefit
or annuity balance remains after payment of accelerated benefits or the early
withdrawal of annuity proceeds for which surrender charges were waived, the
accidental death benefit provision, if any, in the underlying policy shall not
be affected by the payment of any accelerated benefits or early withdrawal of
annuity proceeds.
(b) If no death
benefit or annuity balance remains, the accidental death benefit provision, if
any, in the underlying policy shall have no effect.
(14)
Policy
Reserves.
(a) When benefits are
intended to be provided through the acceleration of benefits or waiver of
surrender chargesforearlywithdrawalsfrom annuity proceeds, policy reserves
shall be determined in accordance with the Standard Valuation Law.
(b) All valuation assumptions used in
constructing the reserves shall be determined as appropriate for statutory
valuation purposes by a member in good standing of the American Academy of
Actuaries.
1. Mortality tables and interest
rates currently recognized for life insurance reserves by the NAIC may be used
as well as appropriate assumptions for the other provisions incorporated in the
policy form.
2. The actuary must
follow both actuarial standards and certification for good and sufficient
reserves.
3. Reserves in the
aggregate shall be sufficient to cover:
a.
policies upon which no claim has yet arisen, as well as
b. policies uponwhichanaccelerated claim or
early withdrawal of annuity proceeds has arisen.
(15)
Exemption from
Reserves. No additional reserves need to be established for the
following products:
(a) For policies which
provide actuarially equivalent benefits with or without an option to accelerate
death benefits or to waive the surrender charges for early withdrawal of
annuity proceeds.
(b) For group
insurance policies which provide accelerated death benefits without a separate
premium charge or annuities with a waiver of surrender charges for early
withdrawal of annuity proceeds without separate premium charge and which are
experience-rated.
