Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 55.00 - Disclosure Requirements For Life Insurance Policies With Accelerated Benefit Provisions And Annuity Contracts With Waivers Of Surrender Charges For Early Withdrawal Of Annuity Proceeds In The Event Of Total And Permanent Disability
Section 55.06 - Requirements for Disclosure

(a) All carriers offering either accelerated benefit products or waiver of surrender charges for early withdrawals of annuity proceeds, shall issue a disclosure statement, as describedin211 CMR 55.100, to the applicant at the time application is made or by separate communication with receipt or certification of delivery. The disclosure statement must be a free-standing document, plainly printed in light-faced type of a style in general use, the size of which shall be uniform and not less than 12-point type with boldface type as noted, and must not contain material of an advertising nature. The disclosure statement must be signed by the owner or proposed owner of the policy, as well as the writing insurance producer or company representative at the time of application.

(b) All carriers offering either accelerated benefit products or waiver of surrender charges for early withdrawals of annuity proceeds shall issue the appropriate disclosure statement, as described in 211 CMR 55.110, to the applicant at the time application for accelerated benefits or early withdrawal with waiver of surrender charges is elected or by separate communication with receipt or certification of delivery. All terms used must be clearly explained so that the policyholder understands the effect of accelerating death benefits or making an early withdrawal on annuity proceeds.

(c) For policies that do not provide benefits in the case of Chronic Illness, carriers may omit from the disclosure statement all references to Chronic Illness.

(a) All terms used in the policy must be fully explained so that the policyholder or certificateholder understands his or her relationship to the benefits provided;

(b) No misleading policy names may be used;

(c) The term "accelerated benefit" shall be included in the description, and the term "long-term care insurance" may not be used in describing or marketing accelerated benefit products;

(d) Limitations or exclusions must be highlighted on the first page of the policy, or there must be a highlighted cross-reference onthe first page to the "limitations or exclusions" section of the policy;

(e) If a policy is convertible, a notice is to be on the first page that identifies that the policy is convertible;

(f) If issued on other than an individual basis, policies providing conversion privileges must specify the benefits to be provided or must state that the converted coverage shall be on the policy form then being issued by the company for this purpose;

(g) When age is to be used as a determining factor for reducing the benefits made available in the policy as originally issued, such fact must be prominently set forth in the policy;

(h) If the policy is issued on a basis other than that applied for, a disclosure statement properly describing the policy must accompany the policy when it is delivered and contain the following statement, in no less than 14-point type, immediately above the company name: "NOTICE: Read this disclosure statement carefully. The coverage you originally applied for has not been issued. This policy is therefore not identical to the coverage you requested - it differs in the following respects: [list];"

(i) Riders or endorsements that provide a benefit for which a specific premium is charged must show the premium on the application, rider, or elsewhere in the policy;

(j) Any rider that reduces benefits requires a signed acceptance by the policyholder or certificateholder unless such coverage is provided under a master policy owned by an employer or trade union;

(k) Prior to the addition of an accelerated benefit product to anexisting life insurance policy and prior to the payment of any accelerated benefit to the policyholder or non-group policy owner, the carrier shall notify any assignee or irrevocable beneficiary in writing, at his or her last known address, of any present or future effect on the rights of such third parties under the life insurance policy, and may require a signed acknowledgment of concurrence before paying accelerated benefits;

(l) The carrier must prominently note the following, in substantially similar form and content, on either the face of the policy or rider, or on a sticker attached to the face of the policy or rider: "Accelerated benefit payments from this policy may qualify for special tax status, if, according to federal definitions, the insured qualifies as terminally ill, or qualifies as chronically ill and uses the accelerated benefit to pay for costs incurred by the insured for qualified long-term care services provided for the insured during the chronic illness. However, ifthe accelerated benefit is based on "medical conditions" and not terminal or chronic illness as defined in the federal tax code, the benefits maybe taxable. We recommend that you contact a tax advisor whenmakingtax-related decisions about electing to receive and use benefits from an accelerated benefit product."

(a) The carrier must prominently note the following, in substantially similar form and content, on either the face of the claim settlement, or on a sticker attached to the face of the settlement of a claim for accelerated benefits: "Accelerated benefit payments from this policy may qualify for special tax status, if, according to federal definitions, the insured qualifies as terminally ill, or qualifies as chronicallyill and uses the accelerated benefit to pay for costs incurred by the insured for qualified long-term care insurance services provided for the insured during the chronic illness. However, if the accelerated benefit is based on "medical conditions" and not terminal or chronic illness as defined in the federal tax code, the benefits may be taxable. We recommend that you contact a tax advisor when making tax-related decisions about electing to receive and use benefits from an accelerated benefit product."

(b) The carrier must provide an illustration as set forth in 211 CMR 55.110, or one which contains substantially the same information in a format approved by the Commissioner.

(c) Lump Sum Payments: Regardless of the marketing method used, when a policyholder makes a claim for the lump sum payment of accelerated benefits for policies other than those providing benefits for conditions of Chronic Illness only and those policies using the lien method described in 211 CMR 55.05(10)(b), the carrier is required to issue a new or amended schedule page to reflect any new, reduced in-force face amount of the underlying life insurance policy, and any effect on the accumulation account, cash value, loan balance and future premiums. Group carriers paying such claims may substitute an equivalent Explanation of Benefits statement for delivery to the group certificateholder.