Oregon Administrative Rules
Chapter 836 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, INSURANCE REGULATION
Division 51 - LIFE, INDIVIDUAL AND GROUP; ANNUITIES
Section 836-051-0370 - Minimum Benefit Standards

Universal Citation: OR Admin Rules 836-051-0370

Current through Register Vol. 63, No. 12, December 1, 2024

(1) For purposes of this rule, accelerated benefits consist of:

(a) The risk portion of the accelerated benefit, determined by deducting the cash values in the contract from the total accelerated benefit amount; and

(b) The portion of the accelerated benefit equal to the cash value in the policy at the time of acceleration. Any amount included in the accelerated benefit that is accessible through another policy provision is subject to that policy provision if more favorable to the policy holder or certificate holder. Such an amount must be separately identified.

(2) An insurer may require a premium charge or cost of insurance charge for the accelerated benefit provision. Such a charge shall be based on sound actuarial principles. In the case of group insurance, the additional cost may also be included in the experience rating.

(3) The following provisions apply to deferred financing options relating to an accelerated benefit provision:

(a) An insurer may pay a present value of the face amount or portion of the face amount being accelerated. The calculation must be based on any applicable actuarial discount appropriate to the policy design. The interest rate or interest rate methodology used in the calculation must be based on sound actuarial principles and disclosed in the contract and actuarial memorandum;

(b) An insurer may accrue an interest charge on the amount of the accelerated benefit as part of a lien against the death proceeds. The interest rate or interest rate methodology used in the calculation must be based on sound actuarial principles and disclosed in the contract and actuarial memorandum;

(c) For purposes of subsections (a) and (b) of this section, the maximum interest rate used on the risk portion must not be greater than the greater of:
(A) The current yield on 90-day treasury bills; or

(B) The current maximum statutory adjustable policy loan interest rate. If a policy, certificate or rider does not have a loan provision, the maximum rate shall not be greater than the fixed statutory policy loan interest rate.

(d) For purposes of subsections (a) and (b) of this section, the interest rate used on the portion that is equal in amount to the cash value of the contract at the time of the benefit acceleration must not be more than the policy or certificate loan interest rate stated in the policy, certificate or rider.

(4) When an accelerated benefit is payable, not more than a pro rata reduction may be made in the cash value based on the percentage of death benefits accelerated to produce the accelerated benefit payment.

(5) An insurer may consider the payment of accelerated benefits, any administrative expense charges, any future premiums and any accrued interest to be a lien against the death benefit of the policy, certificate or rider and may restrict the access to the cash value 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 also be limited to any excess of the cash value over the sum of the lien any any other outstanding policy loans.

(6) When payment of an accelerated benefit results in a pro rata reduction in the cash value, the insurer may not apply the payment toward repaying an amount greater than a pro rata portion of any outstanding policy loans.

Stat. Auth.: ORS 731.244 & ORS 743.154

Stats. Implemented: ORS 743.154

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