Pennsylvania Code
Title 31 - INSURANCE
Part IV - Life Insurance
Chapter 90f - INDIVIDUAL IMMINENT DEATH/LIFETIME HEALTH CARE FACILITY CONFINEMENT BENEFITS PROVIDED AS ACCELERATED DEATH BENEFIT OR SETTLEMENT OF DEATH BENEFIT; PROVIDED BY RIDERS OR BUILT INTO POLICIES-STATEMENT OF POLICY
Section 90f.3 - Benefit design

Universal Citation: 31 PA Code § 90f.3

Current through Register Vol. 54, No. 44, November 2, 2024

(a) Alternatives.

(1) The form discloses that a benefit will be paid if elected by the owner when the following condition occurs: Due to a medically determinable condition suffered by the insured, the insured's life expectancy is expected to be for a limited period of time. The allowable time periods range from "6 months or less" to "12 months or less."

(2) The form discloses that a benefit will be paid if elected by the owner when the following condition occurs: The insured suffers from a medical condition that would in the absence of treatment result in death within a limited period of time. The allowable time periods range from "6 months or less" to "12 months or less."

(3) The form discloses that a benefit will be paid if elected by the owner when the following condition occurs: The insured suffers a total and permanent disability which prevents the insured from performing any work for pay or profit for a period of time. The allowable time period is no longer than "12 months."

(4) The form discloses that a benefit will be paid if elected by the owner when the following condition occurs: The insured suffers a disability which prevents the insured from engaging in the substantial and material duties of an occupation for which the insured is or may reasonably become qualified by reason of education, experience or training for a period of time. The allowable time period is no longer than "12 months."

(5) The form discloses that a benefit will be paid if elected by the owner when one or more of the following conditions occurs:

(i) Due to a medically determinable condition suffered by the insured, the insured's life expectancy is expected to be for a limited period of time. The allowable time periods range from "6 months or less" to "12 months or less."

(ii) The insured suffers from a medical condition that would in the absence of treatment result in death within a limited period of time. The allowable time periods range from "6 months or less" to "12 months or less."

(iii) The insured suffers a total and permanent disability. The disability prevents the insured from performing any work for pay or profit and exists for a period of time. The allowable time period is no longer than "12 months."

(iv) The insured suffers a disability which prevents the insured from engaging in the substantial and material duties of an occupation for which the insured is or may reasonably become qualified by reason of education, experience or training for a period of time. The allowable time period is no longer than "12 months."

(6) The form discloses that a benefit will be paid if elected by the owner when any one of the preceding alternatives applies with the addition of the following alternative condition: The insured is confined to an eligible health care facility with the expectation that the insured will remain in the facility for his entire lifetime.

(b) General form requirements. For any of the alternatives:

(1) The form does or does not provide that the cause of death, disability or health care facility confinement is a result of sickness or injury.

(2) The form does not provide that the cause may not be sickness.

(3) The form does not provide that the cause may not be injury.

(4) The form does or does not provide that there is no reasonable prospect of recovery from the cause of death or health care facility confinement.

(c) Medically determinable condition. For purposes of this subsection, the medically determinable condition or medical condition is not restricted to one or more specific medical condition. A medically determinable condition or medical condition, except as excluded in accordance with § 90f.4 (relating to exclusions and restrictions) qualifies.

(d) Cause for the disability. For purpose of this subsection, the cause for the disability or need of care from the health care facility is not restricted to one or more specific medical condition. A medical condition, except as excluded in accordance with § 90f.4, is acceptable.

(e) Benefit paid. The form discloses the benefit paid.

(1) The amount of the benefit paid is meaningful. If the benefit is designed as an accelerated death benefit, the benefit, including the aggregate of all periodic payments, is meaningful if it is equivalent to at least 25% of the total death benefit affected by the benefit payment.

(2) The form provides an explanation of how the benefit payment is determined.

(3) The form discloses the maximum benefit amount that will be paid over the lifetime of the coverage. This amount does not exceed 100% of the total death benefit affected by the benefit payment.

(4) The benefit is paid periodically or in a lump sum.

(5) The form does not provide for age or duration requirements as to when the insured is first eligible for the benefit.

(f) Conditions for payment. The form discloses the conditions for payment of the accelerated death benefit.

(1) A licensed physician provides certification that the insured is diagnosed to have a life expectancy of the limited period of time as required by the form or the insured has suffered a medical condition which will in the absence of treatment result in death within a limited period of time as required by the form, whichever is applicable or the insured has suffered a total and permanent disability which will result in the insured's inability to perform any work for pay or profit and the disability has existed for the limited period of time as required by the form. Additionally, if the form includes coverage for confinement to an eligible health care facility with the expectation that the insured will remain in the facility for his entire lifetime, a licensed physician provides certification to that effect.

(2) An examination of the insured may or may not be required by the insurer at its expense to qualify for the benefit.

(3) The form may or may not require a second medical opinion.

(4) The diagnosis, need for treatment or disability occurs during the coverage period.

(5) The diagnosis, need for treatment or disability occurs while the rider, and policy, or the policy, in the case of a built-in benefit, are in force.

(6) The form does or does not require that diagnosis, need for treatment or disability be provided while the policy is in full force; for example, not under a nonforfeiture option.

(7) The form does not provide for a probationary period during which coverage is not effective. If the form provides a benefit when the insured is confined to an eligible health care facility with the expectation that the insured will remain in the facility until death, an elimination or waiting period is or is not applied to the health care facility benefit. The probationary period does not exceed 90 days or 180 days, if the benefit is designed as a settlement of the life insurance proceeds based on a reduced life expectancy of the insured and there is no scheduled premium charge for the benefit other than an administrative charge made at the time the settlement is made.

(8) The owner requests payment of the benefit.

(9) The form does or does not provide that it cannot be assigned. If the form provides that it may be assigned, the form does or does not require the written consent of any assignee prior to the election of the benefit.

(10) A return of the contract to the insurer may or may not be required.

(11) The form does or does not require the written consent of the beneficiary prior to the election of the benefit.

(g) Death benefit reduced.

(1) The form contains a clear statement that the death benefit and any accumulation values and cash values will be reduced if an accelerated death benefit is paid. The statement appears immediately following the caption of the form in prominent type on the first page of the rider. If the benefit is built into the policy and the brief description refers to the benefit, the statement appears in close proximity to the brief description of the policy in prominent type on the first page of the policy. If the benefit is not referred to in the brief description, the statement appears in a prominent position in prominent type on the first page of the policy. Prominent type means, for example, all capital letters, contrasting color, underlined or otherwise differentiated from the other type in the form.

(2) This statement is unnecessary if the benefit is designed as a settlement of the life insurance proceeds based on a reduced life expectancy of the insured and is equal to 100% of the policy death benefit and the policy terminates upon payment of the settlement option. The benefit can be paid out in monthly installments.

(h) Effects of payment of benefit.

(1) The form describes the effects of the payment of the benefit on the death benefit and accumulation value, cash value, loan balance and premium payment following payment of a benefit or at settlement of the life insurance proceeds based on a reduced life expectancy of the insured.

(2) If the cash value or accumulation value are reduced by the proportional reduction in the death benefit, the fixed premiums for the policy, affected death benefit riders and imminent death benefit are reduced by the same proportional amount.

(3) If the cash value or accumulation value are reduced by 100% of the benefit payment amount, as a lien, an adjustment in the premium of the policy, affected death benefit riders and imminent death benefit may or may not be made.

(4) If the premium for the imminent death benefit form is flexible and the form is attached to or included in a flexible premium policy or with flexible premium affected death benefit riders, an adjustment to the premium payment of the policy, affected death benefit riders and imminent death benefit may or may not be made. If an adjustment is made, the reasons for the premium adjustment are explained in writing.

(5) If the benefit payment is reduced by an amount of the loan balance, the loan balance is reduced by the same amount.

(i) Single premium policy. If the form is attached to or included in a single premium policy, the benefit payment is increased by the portion of the single premium unearned as of the date of qualification for the benefit corresponding to the amount of the benefit payment.

(j) Renewable coverage. If the forms provide renewable coverage, the renewability is guaranteed.

(k) Cancellation. The form is not subject to cancellation by the insurer during the coverage period, except as provided in the grace period and nonforfeiture provisions.

(l) Health care facility licensure. If the form provides that the health care facility must be licensed by the jurisdiction in which it is located, clarification is provided in the form that licensing is only required if the jurisdiction actually requires licensing.

(m) Pooling of values.

(1) The form does or does not provide for the pooling of the values of all policies issued on the insured's life by the insurer or by the insurer and affiliated insurers. Pooling is for the purpose of determining initial eligibility for the benefit or the amount and duration of the benefit. If a form provides for pooling, the insurer certifies that a copy of the form will be included in each affected policy. As an alternative for policies issued prior to the issuance of the form, the insurer certifies that a certificate listing the policies eligible for the benefit will be provided to the owner. The form discloses the manner in which the pooling affects any conditions, restrictions or benefits in the form.

(2) The form does not provide for the pooling of the values of policies issued on the insured by the insurer and nonaffiliated insurers.

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