Current through Register Vol. 39, No. 6, September 16, 2024
(a) This Rule shall
apply to all long-term care insurance policies except those subject to
11 NCAC
12 .1014 and
12 .1028. Further,
11 NCAC
12 .0555(b)(3) shall not
apply to policies or certificates covered under
11 NCAC
12 .1014 and
12 .1028.
(b) Benefits under long-term care insurance
policies shall be deemed to be reasonable in relation to premiums, provided
that the expected loss ratio is at least 60 percent for individual policies and
75 percent for group policies, and is calculated in a manner that provides for
reserving of the long-term care insurance risk. In evaluating the expected loss
ratio, consideration shall be given to all relevant factors, including:
(1) statistical credibility of incurred
claims experience and earned premiums;
(2) the period for which rates are computed
to provide coverage;
(3)
experienced and projected trends;
(4) concentration of experience within early
policy duration;
(5) expected claim
fluctuation;
(6) experience
refunds, adjustments, or dividends;
(7) renewability features;
(8) expense factors;
(9) interest;
(10) experimental nature of the
coverage;
(11) policy
reserves;
(12) mix of business by
risk classification; and
(13)
product features such as long elimination periods, high deductibles, and high
maximum limits.
(c)
Paragraph (b) of this Rule shall not apply to life insurance policies that
accelerate benefits for long-term care. A life insurance policy that funds
long-term care benefits entirely by accelerating the death benefit is
considered to provide reasonable benefits in relation to premiums paid, if the
policy complies with all of the following provisions:
(1) The interest credited internally to
determine cash value accumulations, including long-term care, if any, is
guaranteed not to be less than the minimum guaranteed interest rate for cash
value accumulations without long-term care set forth in the policy;
(2) The portion of the policy that provides
life insurance benefits meets the nonforfeiture requirements of
G.S.
58-58-55;
(3) The policy meets the disclosure
requirements of
G.S.
58-55-30;
(4) Any policy illustration meets the
applicable requirements of
11 NCAC
04 .0500; and
(5) An actuarial memorandum is filed with the
Commissioner that includes:
(A) A description
of the basis on which the long-term care rates were determined;
(B) A description of the basis for the
reserves;
(C) A summary of the type
of policy, benefits, renewability, general marketing method, and limits on ages
of issuance;
(D) A description and
a table of each actuarial assumption used. For expenses, an insurer must
include percent of premium dollars per policy and dollars per unit of benefits,
if any;
(E) A description and a
table of the anticipated policy reserves and additional reserves to be held in
each future year for active lives;
(F) The estimated average annual premium per
policy and the average issue age;
(G) A statement as to whether underwriting is
performed at the time of application. The statement shall indicate whether
underwriting is used and, if used, the statement shall include a description of
the type or types of underwriting used, such as medical underwriting or
functional assessment underwriting. Concerning a group policy, the statement
shall indicate whether the enrollee or any dependent will be underwritten and
when underwriting occurs; and
(H) A
description of the effect of the long-term care policy provision on the
required premiums, nonforfeiture values and reserves on the underlying life
insurance policy, both for active lives and those in long-term care claim
status.
Authority
G.S.
58-2-40(1);
58-55-30(a);
Eff. September 1, 1990;
Amended Eff. August 1, 2002;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. May 1, 2018.
