Current through Register Vol. 39, No. 6, September 16, 2024
(a) Descriptive
Title. The term "accelerated benefit" shall be included in the descriptive
title printed on the first page of the policy or rider. Products regulated
under this Section shall not be described or marketed as long-term care
insurance or as providing long-term care benefits.
(b) Tax Consequences. A disclosure statement
is required at the time of application for the policy or rider and at the time
the accelerated benefit payment request is submitted, which statement shall
advise that receipt of accelerated benefits may be taxable and that assistance
should be sought from a personal tax advisor. The statement shall be
prominently displayed on the first page of the policy or rider and on any other
related documents.
(c)
Solicitation:
(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. The description shall include an
explanation of any effect of the payment of a benefit on the policy's cash
value, accumulation account, death benefit, premium, policy loans and policy
liens:
(A) In the case of agent solicited
insurance, the agent shall provide the disclosure form to the applicant prior
to or concurrently with the application. Acknowledgement of the disclosure
shall be signed by the applicant and writing agent.
(B) In the case of a solicitation by direct
response methods, the insurer shall incorporate the disclosure in the
application or attach a disclosure form thereto.
(C) In the case of group insurance policies,
the disclosure form shall be contained as part of the certificate of coverage
or any 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:
(A) In
the case of agent solicited insurance, the agent shall provide the illustration
to the applicant prior to or concurrently with the application.
(B) In the case of a solicitation by direct
response methods, the insurer shall provide the illustration to the applicant
at the time the policy is delivered.
(C) In the case of group insurance policies,
the disclosure form shall be contained as part of the certificate of coverage
or any related document furnished by the insurer for the certificate
holder.
(3) Disclosure
of Premium Charge:
(A) Insurers with financing
options other than those described in
11 NCAC
12 .1210(a)(2) shall
disclose to the policy owner any premium or cost of insurance charge for the
accelerated benefit. Each 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 such charge.
(B) Each insurer shall furnish an actuarial
demonstration to the Department when filing a policy form containing an
accelerated benefit, which demonstration shall disclose the method of arriving
at the insurer's cost for the accelerated benefit.
(4) Disclosure of Administrative Expense
Charge. Each insurer shall disclose to each policy owner any administrative
expense charge. Each insurer shall make a reasonable effort to assure that each
certificate holder is aware of any administrative expense charge if the
certificate holder is required to pay such charge.
(d) Effect of the Benefit Payment. 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 showing 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. The statement shall disclose that:
(1) receipt of accelerated benefit payments
may adversely affect the recipient's eligibility for Medicaid or other
government benefits or entitlement; and that
(2) receipt of an accelerated benefit payment
may be taxable and assistance should be sought from a personal tax advisor.
Each time an accelerated benefit option is exercised the
policy owner and certificate holder shall be given an endorsement, rider or
schedule page that reflects any revisions to cash values, death benefits,
accumulation accounts, premiums, policy loans, policy liens and any other
values that change as a result of the payment or payments. 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. When the
insurer agrees to accelerate death benefits, the insurer shall issue an amended
schedule page to the policyholder or notify the certificate holder under a
group policy to reflect any new, reduced in-force face amount of the
contract.
Authority
G.S.
58-2-40;
58-3-150;
58-7-15(1);
58-58-1;
Eff. March 1,
1992;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. May 1, 2018.
