Current through Register Vol. 41, No. 3, September 23, 2024
A. The terminology "accelerated benefit"
shall be included in the descriptive title. Products regulated under this
chapter shall not be described or marketed as long-term care insurance or as
providing long-term care or other type of illness benefits.
B. 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 that receipt of these accelerated benefits
may be taxable and that assistance should be sought from a personal tax
advisor. The disclosure statement shall be prominently displayed on the first
page of the policy or rider and any other related documents.
C.
1. A
written disclosure including, but not necessarily 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.
Acknowledgment 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 provide the
disclosure form to the applicant at the time the policy is delivered, with a
notice that a full premium refund shall be received if the policy is returned
to the company within the free look period.
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 individual
certificateholder.
2. If
there is a premium or cost of insurance charge for the accelerated benefit, 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 individual
certificateholder.
3.
a. Insurers with financing options other than
as described in
14VAC5-70-120 A 2 and A 3 shall
disclose to the policyowner any premium or cost of insurance charge for the
accelerated benefit. These insurers shall make a reasonable effort to assure
that the certificateholder is aware of any additional premium or cost of
insurance charge if the certificateholder is required to pay such
charge.
b. Insurers shall furnish
an actuarial demonstration to the commission when filing the product disclosing
the method of arriving at their cost for the accelerated benefit.
4. The insurer shall disclose to
the policyowner any administrative expense charge. The insurer shall make a
reasonable effort to assure that the certificateholder is aware of any
administrative expense charge if the certificateholder is required to pay such
charge.
D. When a
policyowner or certificateholder requests an acceleration, the insurer shall
send a statement to the policyowner or certificateholder 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 receipt of
accelerated benefit payments may adversely affect the recipient's eligibility
for Medicaid or other government benefits or entitlements. In addition, receipt
of an accelerated benefit payment may be taxable and assistance should be
sought from a personal tax advisor. 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 policyowner or
certificateholder 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 certificateholder under a group policy to
reflect any new, reduced in-force face amount of the contract.
