Current through Register Vol. 48, No. 3, March 22, 2024
A. This Section
shall apply to all long term care insurance policies or certificates except
those covered under Sections
10 and 20.
B. Benefits under long term care insurance
policies shall be deemed reasonable in relation to premiums provided the
expected loss ratio is at least sixty percent (60%), calculated in a manner
which provides for adequate reserving of the long term care insurance risk. In
evaluating the expected loss ratio, due 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) All appropriate 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.
Subsection B 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, are 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 S.C. Code Section
38-63-510
et seq.;
(3) The policy meets the
disclosure requirements contained in S.C. Code Section
38-72-10 et
seq.;
(4) Any policy illustration
that meets the applicable requirements of Regulation 69-40; and
(5) An actuarial memorandum is filed with the
insurance department 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.
