Current through September 24, 2024
(1) This rule does
not apply to life insurance policies or riders containing accelerated long-term
care benefits.
(2) Except as
provided in Paragraph (3) of this rule, a long-term care policy may not be
delivered or issued for delivery in this state unless the policyholder or
certificateholder has been offered the option of purchasing a policy or
certificate including a nonforfeiture benefit. The offer of a nonforfeiture
benefit may be in the form of a rider that is attached to the policy. In the
event the policyholder or certificateholder declines the nonforfeiture benefit,
the insurer shall provide a contingent benefit upon lapse that shall be
available for a specified period of time following a substantial increase in
premium rates.
(3) When a group
long-term care insurance policy is issued, the offer required in Paragraph (2)
of this rule shall be made to the group policyholder. However, if the policy is
issued as group long-term care insurance as defined in this Chapter, other than
to a continuing care retirement community or other similar entity, the offering
shall be made to each proposed certificateholder.
(4) A policy or certificate offered with
nonforfeiture benefits shall have coverage elements, eligibility, benefit
triggers and benefit length that are the same as coverage to be issued without
nonforfeiture benefits. The nonforfeiture benefit included in the offer shall
be the benefit described in Paragraph (7) of this rule and the offer shall be
in writing if the nonforfeiture benefit is not otherwise described in the
Outline of Coverage or other materials given to the prospective
policyholder.
(5) If the offer
required to be made is rejected, the insurer shall provide the contingent
benefit upon lapse described in this rule.
(6)
(a)
After rejection of the offer, for individual and group policies without
nonforfeiture benefits issued after the effective date of this rule, the
insurer shall provide a contingent benefit upon lapse.
(b) In the event a group policyholder elects
to make the nonforfeiture benefit an option to the certificate holder, a
certificate shall provide either the nonforfeiture benefit or the contingent
benefit upon lapse.
(c) The
contingent benefit upon lapse shall be triggered every time an insurer
increases the premium rates to a level which results in a cumulative increase
of the annual premium equal to or exceeding the percentage of the insured's
initial annual premium set forth below based on the insured's issue age, and
the policy or certificate lapses within 120 days of the due date of the premium
so increased. Unless otherwise required, policyholders shall be notified at
least thirty (30) days prior to the due date of the premium reflecting the rate
increase.
| Triggers for a Substantial Premium
Increase |
| Percent Increase
Over |
| Issue Age | Initial
Premium |
| 29 and under | 200% |
| 30-34 | 190% |
| 35-39 | 170% |
| 40-44 | 150% |
| 45-49 | 130% |
| 50-54 | 110% |
| 55-59 | 90% |
| 60 | 70% |
| 61 | 66% |
| 62 | 62% |
| 63 | 58% |
| 64 | 54% |
| 65 | 50% |
| 66 | 48% |
| 67 | 46% |
| 68 | 44% |
| 69 | 42% |
| 70 | 40% |
| 71 | 38% |
| 72 | 36% |
| 73 | 34% |
| 74 | 32% |
| 75 | 30% |
| 76 | 28% |
| 77 | 26% |
| 78 | 24% |
| 79 | 22% |
| 80 | 20% |
| 81 | 19% |
| 82 | 18% |
| 83 | 17% |
| 84 | 16% |
| 85 | 15% |
| 86 | 14% |
| 87 | 13% |
| 88 | 12% |
| 89 | 11% |
| 90 and over | 10% |
(d)
On or before the effective date of a substantial premium increase as defined in
Paragraph (6)(c) of this rule, the insurer shall:
1. Offer to reduce policy benefits provided
by the current coverage without the requirement of additional underwriting so
that required premium payments are not increased;
2. Offer to convert the coverage to a paid-up
status with a shortened benefit period in accordance with the terms of
Paragraph (7) of this rule. This option may be elected at any time during the
120-day period referenced in Paragraph (6)(c) of this rule; and
3. Notify the policyholder or certificate
holder that a default or lapse at any time during the 120-day period referenced
in Paragraph (6)(c) of this rule shall be deemed to be the election of the
offer to convert as referenced in Paragraph (6)(d)2 of this rule.
(7) Benefits continued
as nonforfeiture benefits, including contingent benefits upon lapse, are
described in this paragraph:
(a) For purposes
of this paragraph, attained age rating is defined as a schedule of premiums
starting from the issue date which increases age at least one percent (1%) per
year prior to age fifty (50), and at least three percent (3%) per year beyond
age fifty (50).
(b) For purposes of
this paragraph, the nonforfeiture benefit shall be of a shortened benefit
period providing paid-up long-term care insurance coverage after lapse. The
same benefits (amounts and frequency in effect at the time of lapse but not
increased thereafter) will be payable for a qualifying claim, but the lifetime
maximum dollars or days of benefits shall be determined as specified in
Paragraph (7)(c) of this rule.
(c)
The standard nonforfeiture credit will be equal to one hundred percent (100%)
of the sum of all premiums paid, including the premiums paid prior to any
changes in benefits. The insurer may offer additional shortened benefit period
options, as long as the benefits for each duration equal or exceed the standard
nonforfeiture credit for that duration. However, the minimum nonforfeiture
credit shall not be less than thirty (30) times the daily nursing home benefit
at the time of lapse. In either event, the calculation of the nonforfeiture
credit is subject to the limitation of Paragraph (8) of this rule.
(d)
1. The
nonforfeiture benefit shall begin not later than the end of the third year
following the policy or certificate issue date. The contingent benefit upon
lapse shall be effective during the first three (3) years as well as
thereafter.
2. Notwithstanding
Paragraph (7)(d)1. for a policy or certificate with attained age rating, the
nonforfeiture benefit shall begin on the earlier of:
(i) The end of the tenth (10th) year
following the policy or certificate issue date; or
(ii) The end of the second (2nd) year
following the date the policy or certificate is no longer subject to attained
age rating.
(e) Nonforfeiture credits may be used for all
care and services qualifying for benefits under the terms of the policy or
certificate, up to the limits specified in the policy or certificate.
(8) All benefits paid by the
insurer while the policy or certificate is in premium paying status and in the
paid up status will not exceed the maximum benefits which would be payable if
the policy or certificate had remained in premium paying status.
(9) There shall be no difference in the
minimum nonforfeiture benefits as required under this paragraph for group and
individual policies.
(10) The
requirements set forth in this rule shall become effective twelve (12) months
after the effective date of this rule and shall apply as follows:
(a) Except as provided in Paragraph (10)(b),
the provisions of this paragraph apply to any long-term care policy issued in
this state on or after the effective date of this rule.
(b) For certificates issued on or after the
effective date of this rule, under a group long-term care insurance policy as
defined in this Chapter, which policy was in force at the time this amended
rule became effective, the provisions of this paragraph shall not
apply.
(11) Premiums
charged for a policy or certificate containing nonforfeiture benefits or a
contingent benefit upon lapse shall be subject to the loss ratio requirements
of Rule 0780-1-61-.19 treating the policy as a whole.
(12) To determine whether contingent
nonforfeiture benefit upon lapse provisions are triggered under Paragraph
(6)(c) of this rule, a replacing insurer that purchased or otherwise assumed a
block or blocks of long-term care insurance policies from another insurer shall
calculate the percentage increase based on the initial annual premium paid by
the insured when the policy was first purchased from the original
insurer.
(13) A nonforfeiture
benefit for qualified long-term care insurance contracts that are level premium
contracts shall be offered that meets the following requirements:
(a) The nonforfeiture provision shall be
appropriately captioned;
(b) The
nonforfeiture provision shall provide a benefit available in the event of a
default in the payment of any premiums and shall state that the amount of the
benefit may be adjusted subsequent to being initially granted only as necessary
to reflect changes in claims, persistency and interest as reflected in changes
in rates for premium paying contracts approved by the Commissioner for the same
contract form; and
(c) The
nonforfeiture provision shall provide at least one (1) of the following:
1. Reduced paid-up insurance;
2. Extended term insurance;
3. Shortened benefit period; or
4. Other similar offerings approved by the
Commissioner.
Authority: T.C.A. §
56-42-105.
