Current through Register Vol. 46, No. 39, September 25, 2024
(a) No life insurance policy providing for
unemployment lapse protection benefit shall be delivered or issued for delivery
in this State, unless it contains a provision:
(1) that describes the types or causes of
unemployment that are covered by the unemployment lapse protection
benefit;
(2) that sets forth the
conditions of eligibility for coverage. The conditions may include:
(i) a requirement that the insured be
actively at work on a full-time basis on the date of application or issue, or
prior to the date of application or issue for a minimum period not exceeding 12
months. The term full-time shall be defined in the policy to mean a minimum
number of hours no greater than 30 hours per week;
(ii) a requirement that the insured has not
received or been eligible to receive a State or Federal unemployment benefit
for a minimum period of time, not exceeding 12 months, prior to the application
date or the issue date; and
(iii) a
requirement that the insured be an eligible age on the date of application or
issue, provided that the maximum age shall not be less than 65;
(3) indicating when, after
commencement of involuntary unemployment, the life insurance coverage first
becomes protected against lapse and, if applicable, that required premiums must
be paid by the insured until that time;
(4) that describes where the notice of claim
forms can be obtained or, if no claim form is required, the information
required for such notice of claim, together with the address where such notice
must be delivered;
(5) that
specifies any documents or other information needed to serve as proof of
unemployment;
(6) that describes
the conditions or circumstances that must occur to make a claim under the
policy for the unemployment lapse protection benefit. The conditions or
circumstances may include the following:
(i)
a requirement that the insured actually receive or be eligible to receive State
or Federal unemployment benefits for a minimum period specified in the
form;
(ii) a requirement regarding
the type or cause of the insured's unemployment to be a covered unemployment as
set forth in the form;
(iii) a
requirement that the life insurance coverage be in effect a minimum period of
time before any payments are payable; provided that, if the minimum period of
time exceeds one year, no identifiable charge for the unemployment lapse
protection benefit may be collected until the expiry of this period;
(iv) a requirement that a notice of claim and
proof of unemployment shall be provided to the insurer within a reasonable time
after commencement of a period of unemployment; and
(v) a requirement that the insured be
unemployed for a minimum specified period not to exceed 180 days.
(7) that describes the coverage to
which the unemployment lapse protection benefit applies as well as the terms
and conditions applicable to the benefit with regard to coverage in force prior
to termination of employment. The description shall identify the specific
benefits or coverages (e.g., basic life, supplemental life, accidental death
and dismemberment, guaranteed insurance, waiver of premium for disability
benefit, some specified portion of or all dependent coverage, etc.) to which
the unemployment lapse protection benefit applies, if the unemployment lapse
protection benefit does not apply to all coverages provided under the policy;
and
(8) that describes each basis
for excluding or denying a claim for an unemployment lapse protection benefit.
Some of the bases for excluding or denying a claim for an unemployment lapse
protection benefit are:
(i) voluntary
separation from employment, without good cause (as such term is defined in
section
593 of the Labor
Law);
(ii) retirement;
(iii) loss of income due to disability caused
by accident, sickness, disease or pregnancy;
(iv) loss of income due to termination of
employment as the result of willful misconduct (as defined in the form),
criminal misconduct or unlawful behavior as determined in judicial or
administrative proceedings;
(v)
strikes, lockouts, illegal walkouts, and industrial controversy (as such term
is defined in section 592[1] of the Labor Law); and
(vi) normal or routine scheduled layoff or
plant closing where the employee is expected to be rehired.
(b) Disclosure
provisions.
(1) If eligibility for benefits
is dependent on being eligible for a State or Federal unemployment benefit, as
appropriate, the policy must include a statement prominently displayed setting
forth the following or its equivalent:
Your eligibility for this coverage is dependent on your
being eligible to receive State or Federal [as appropriate] unemployment
benefits. A change in your employment may affect your eligibility for benefits.
If you have any questions you should contact the insurance company.
(2) The policy and application
therefor shall include prominent disclosure of the extent to which the receipt
of the unemployment lapse protection benefit may be considered taxable
income.
(3) The application shall
include a question or statement corresponding to each unemployment lapse
protection benefit eligibility condition.
(c) A policy may impose conditions under
which an insured becomes re-eligible for the maximum unemployment lapse
protection benefit after a period of receiving benefits. If re-eligibility
conditions are required for full benefits for a subsequent period of
unemployment, the conditions may not be more stringent than the initial
eligibility conditions (with no more than a 12-month actively at work
requirement). If an insured has not satisfied the re-eligibility requirement at
the time of a subsequent unemployment, such unemployment shall be considered a
continuation of the prior unemployment with no waiting period, and with a
maximum benefit period equal to the unused portion of the maximum benefit
period for the prior unemployment.
(d) If a policy does not provide for the
insured to become re-eligible for the maximum amount of unemployment lapse
protection benefit after a period of receiving unemployment lapse protection
benefits, then the policy shall provide for notification that benefits have
ended and include with the notice a statement of whether any portion of the
unemployment lapse protection benefit would be payable for a subsequent period
of unemployment. If such benefit remains, then the notice shall provide the
amount of the remaining benefits and the premium required to maintain the
unemployment lapse protection benefit.
(e) Termination provisions.
(1) The policy shall set forth termination
provisions for the unemployment lapse protection benefit. Some of the bases for
termination of the unemployment lapse protection benefit, or some portion
thereof, may include:
(i) the coverage
continues as paid-up insurance;
(ii) the policy is terminated or cancelled
prior to termination of employment;
(iii) the insured reaches a maximum age
specified in the policy, which shall not be less than age 66;
(iv) the policy is surrendered or lapses;
and
(v) the specified maximum
unemployment lapse protection benefit has been paid.
(2) For group life insurance, termination of
the group policy shall not cause the insured's certificate to terminate while
the unemployment lapse protection benefit or waiting period is in effect. The
unemployment lapse protection benefit shall provide that payment of the death
benefit is unaffected by the termination of the group policy when life
insurance coverage is being continued under a valid unemployment lapse
protection benefits claim that occurred prior to the termination of the group
policy.
(f) For
renewable term policies, if the renewal date occurs while the unemployment
lapse protection benefit or waiting period is in effect, policy renewal shall
be automatic.
(g) Coordination of
benefits. If a policy providing for a waiver of premium for unemployment also
provides a waiver of premium or charges for disability benefit or other
disability-related benefits, the policy shall specify how the benefits
interact.
(h) Coverage of other
policies. A policy that includes a lapse protection benefit in the event of the
unemployment of the insured may also provide for protection against lapse due
to the insured's unemployment on insurance provided in either the same policy
or in additional policies on the insured's dependents, provided that for
protection of additional policies:
(1) the
policies insuring the dependents are identified in the insured's policy either
by actually being listed or by description; and
(2) the effect, if any, of each policy being
protected against lapse on the premium charge for this benefit be set forth in
the insured's policy.
