Section 760 IAC 1-48-6 - DisclosuresAuthority: IC 27-1-3-7
Affected: IC 27-1-12
Sec. 6.
(a) The terminology "accelerated benefit" shall be included in the descriptive title. Products subject to this rule shall not be described or marketed as long term care insurance or as providing long term care benefits.(b) A disclosure statement that receipt of these accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents.(c) The following disclosure requirements apply:(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. In addition, the following apply:(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. Acknowledgement 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 certificate holder.(2) If there is a premium or cost of insurance charge, 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. In addition, the following apply: (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 illustration form shall be contained as part of the certificate of coverage or any related document furnished by the insurer for the certificate holder.(3) The following disclosure of premium charges apply: (A) Insurers with financing options other than as described in section 10(a)(2) and 10(a)(3) of this rule shall disclose to the policy owner any premium or cost of insurance charge for the accelerated benefit. These insurers shall make a reasonable effort to assure that the certificate holder is aware of any additional premium or cost of insurance charge if the certificate holder is required to pay such charge.(B) Insurers shall furnish an actuarial demonstration to the insurance department when filing the product disclosing the method of arriving at their cost for the accelerated benefit.(4) The insurer shall disclose to the policy owner any administrative expense charge. The insurer shall make a reasonable effort to assure that the certificate holder is aware of any administrative expense charge if the certificate holder is required to pay such charge.(d) When a policy owner or certificate holder requests an acceleration, the insurer shall send a statement to the policy owner or certificate holder 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. Also, the statement must show the effect that a policy loan and a partial withdrawal, if available, would have on the policy's cash value, accumulation account, death benefit, premiums, and policy loans. 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, the statement shall disclose that receipt of any accelerated benefit payment may be taxable and that 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 policy owner or certificate holder 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 certificate holder under a group policy to reflect any new, reduced in-force face amount of the contract. Department of Insurance; 760 IAC 1-48-6; filed Feb 23, 1993, 5:00 p.m.: 16 IR 1822; readopted filed Sep 14, 2001, 12:22 p.m.: 25 IR 531; readopted filed Nov 27, 2007, 4:01 p.m.: 20071226-IR-760070717RFA; readopted filed November 26, 2013, 3:43 p.m.: 20131225-IR-760130479RFAReadopted filed 11/19/2019, 9:18 a.m.: 20191218-IR-760190497RFA