.................... moves to amend H. F. No. 1892 as follows:
Page 2, after line 2, insert:
"Section 1. Minnesota Statutes 2006, section 61A.072, is amended to read:
POLICIES WITH ACCELERATED BENEFITS.
Disclosure. A life insurance contract or supplemental contract that
1.6 contains a provision to permit the accelerated payment of benefits as authorized under
60A.06, subdivision 1 , clause (4), must contain the following disclosure: "This is a
1.8 life insurance policy which pays accelerated death benefits at your option under conditions
1.9 specified in the policy. This policy is not a long-term care policy meeting the requirements
1.10 of sections
62A.56 or chapter 62S."
1.11 Subd. 4. Long-term care expenses. If the right to receive accelerated benefits
1.12 is contingent upon the insured receiving long-term care services, the contract or
1.13 supplemental contract shall include the following provisions:
1.14 (1) the minimum accelerated benefit shall be $1,200 per month if the insured is
1.15 receiving nursing facility services and $750 per month if the insured is receiving home
1.16 services with a minimum lifetime benefit limit of $50,000;
1.17 (2) coverage is effective immediately and benefits shall commence with the receipt
1.18 of services as defined in section
62A.46, subdivision 3 , 4, or 5, or
, but may include a waiting period of not more than 90 days, provided that no more
1.20 than one waiting period may be required per benefit period as defined in section
1.22 (3) premium shall be waived during any period in which benefits are being paid to
1.23 the insured during confinement to a nursing home facility;
1.24 (4) coverage may not be canceled or renewal refused except on the grounds of
1.25 nonpayment of premium;
2.1 (5) coverage must include preexisting conditions during the first six months of
2.2 coverage if the insured was not diagnosed or treated for the particular condition during the
2.3 90 days immediately preceding the effective date of coverage;
2.4 (6) coverage must include mental or nervous disorders which have a demonstrable
2.5 organic cause such as Alzheimer's and related dementias;
2.6 (7) no prior hospitalization requirement shall be allowed unless a similar requirement
2.7 is allowed by section
62A.48, subdivision 1 , or
62S.06 ; and
2.8 (8) the contract shall include a cancellation provision that meets the requirements of
62A.50, subdivision 2 , or
2.10 Subd. 5. Exclusion. Subdivision 4 does not apply to contracts or supplemental
2.11 contracts granting the right to receive accelerated benefits if (1) one of the options for
2.12 payment provides for lump-sum payment; (2) no conditions or restrictions are imposed on
2.13 the use of the funds by the insured; and (3) the offeree or insured is given written notice
2.14 at the time the contract or supplemental contract is offered or sold that (i) Minnesota
2.15 law sets minimum requirements for life insurance contracts where the right to receive
2.16 accelerated benefits is contingent upon the insured receiving long-term care services,
2.17 and (ii) the contract or supplemental contract being offered or sold does not meet those
2.18 minimum requirements.
2.19 Subd. 6. Accelerated benefits Definitions.
(a) "Accelerated benefits" covered
under this section are benefits payable under the life insurance contract:
(1) to a policyholder or certificate holder, during the lifetime of the insured, in the
2.22anticipation of death or
upon the occurrence of a specified life-threatening or catastrophic
condition as defined by the policy or rider;
(2) that reduce the death benefit otherwise payable under the life insurance contract;
(3) that are payable upon the occurrence of a single qualifying event that results in
the payment of a benefit amount fixed at the time of acceleration.
(b) "Qualifying event" means one or more of the following:
(1) a medical condition that would result in a drastically limited life span as specified
in the contract;
(2) a medical condition that has required or requires extraordinary medical
intervention, such as, but not limited to, major organ transplant or continuous artificial life
support without which the insured would die;
(3) a condition that usually
requires continuous confinement in an eligible institution
as defined in the contract if the insured is expected to remain there for the rest of the
long-term care illness or physical condition that results in cognitive impairment
3.2 or the inability to perform the activities of daily life or the substantial and material
3.3 duties of any occupation medical condition that would, in the absence of extensive or
3.4extraordinary medical treatment, result in a drastically limited life span. Such conditions
3.5may include, but are not limited to, one or more of the following:
3.6 (i) coronary artery disease resulting in an acute infarction or requiring surgery;
3.7 (ii) permanent neurological deficit resulting from cerebral vascular accident;
3.8 (iii) end stage renal failure;
3.9 (iv) Acquired Immune Deficiency Syndrome; or
3.10 (v) other medical conditions that the commissioner shall approve for any particular
(5) other qualifying events that the commissioner approves for a particular filing.
3.13 Subd. 2. Type of product. Accelerated benefit riders and life insurance policies
3.14with accelerated benefit provisions are primarily mortality risks rather than morbidity
3.15risks. They are life insurance benefits subject to this chapter.
3.16 Subd. 3. Assignee/beneficiary. Before paying the accelerated benefit, the insurer is
3.17required to obtain from an assignee or irrevocable beneficiary a signed acknowledgment of
3.18concurrence for payout. If the insurer making the accelerated benefit is itself the assignee
3.19under the policy, no acknowledgment is required.
3.20 Subd. 4. Criteria for payment. (a) Contract payment options shall include the
3.21option to take the benefit as a lump sum. The benefit shall not be made available as an
3.22annuity contingent upon the life of the insured.
3.23 (b) No restrictions are permitted on the use of the proceeds.
3.24 (c) If any death benefit remains after payment of an accelerated benefit, the
3.25accidental death benefit provision, if any, in the policy or rider shall not be affected by the
3.26payment of the accelerated benefit.
3.27 Subd. 5. Disclosures. (a) The terminology "accelerated benefit" shall be included
3.28in the descriptive title. Products regulated under this section shall not be described or
3.29marketed as long-term care insurance or as providing long-term care benefits.
3.30 (b) A disclosure statement is required at the time of application for the policy or
3.31rider and at the time the accelerated benefit payment request is submitted that receipt of
3.32these accelerated benefits may be taxable and that assistance should be sought from a
3.33personal tax advisor. The disclosure statement shall be prominently displayed on the first
3.34page of the policy or rider and any other related documents.
4.1 (c)(1) A written disclosure including, but not necessarily limited to, a brief
4.2description of the accelerated benefit and definitions of the conditions or occurrences
4.3triggering payment of the benefits shall be given to the applicant. The description shall
4.4include an explanation of any effect of the payment of a benefit on the policy's cash value,
4.5accumulation account, death benefit, premium, policy loans, and policy liens.
4.6 (i) In the case of agent solicited insurance, the agent shall provide the disclosure
4.7form to the applicant prior to or concurrently with the application. Acknowledgment of
4.8the disclosure shall be signed by the applicant and writing agent.
4.9 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
4.10the disclosure form to the applicant at the time the policy is delivered, with a notice that
4.11a full premium refund shall be received if the policy is returned to the company within
4.12the free look period.
4.13 (iii) In the case of group insurance policies, the disclosure form shall be contained
4.14as part of the certificate of coverage or any related document furnished by the insurer
4.15for the certificate holder.
4.16 (2) If there is a premium or cost of insurance charge, the insurer shall give the
4.17applicant a generic illustration numerically demonstrating any effect of the payment of a
4.18benefit on the policy's cash value, accumulation account, death benefit, premium, policy
4.19loans and, policy liens.
4.20 (i) In the case of agent-solicited insurance, the agent shall provide the illustration to
4.21the applicant prior to or concurrently with the application.
4.22 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
4.23the illustration to the applicant at the time the policy is delivered.
4.24 (iii) In the case of group insurance policies, the disclosure form shall be contained
4.25as part of the certificate of coverage or any related document furnished by the insurer
4.26for the certificate holder.
4.27 (3) Disclosure of premium charge.
4.28 (i) An insurer with financing options other than as described in subdivision 9,
4.29paragraph (a), clauses (2) and (3), shall disclose to the policy owner any premium or cost
4.30of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort
4.31to assure that the certificate holder is aware of any additional premium or cost of insurance
4.32charge if the certificate holder is required to pay a charge.
4.33 (ii) An insurer shall furnish an actuarial demonstration to the state insurance
4.34department when filing the product disclosing the method of arriving at its cost for the
5.1 (4) The insurer shall disclose to the policy owner any administrative expense charge.
5.2The insurer shall make a reasonable effort to assure that the certificate holder is aware of
5.3any administrative expense charge if the certificate holder is required to pay the charge.
5.4 (d) When a policy owner or certificate holder requests an acceleration, the insurer
5.5shall send a statement to the policy owner or certificate holder and irrevocable beneficiary
5.6showing any effect that the payment of the accelerated benefit will have on the policy's
5.7cash value, accumulation account, death benefit, premium, policy loans, and policy liens.
5.8The statement shall disclose that receipt of accelerated benefit payments may adversely
5.9affect the recipient's eligibility for Medicaid or other government benefits or entitlements.
5.10In addition, receipt of an accelerated benefit payment may be taxable and assistance
5.11should be sought from a personal tax advisor. When a previous disclosure statement
5.12becomes invalid as a result of an acceleration of the death benefit, the insurer shall send
5.13a revised disclosure statement to the policy owner or certificate holder and irrevocable
5.14beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue an
5.15amended schedule page to the policy holder or notify the certificate holder under a group
5.16policy to reflect any new reduced in-force face amount of the contract.
5.17 Subd. 6. Effective date of accelerated benefits. The accelerated benefit provision
5.18shall be effective for accidents on the effective date of the policy or rider. The accelerated
5.19benefit provision shall be effective for illness no more than 30 days following the effective
5.20date of the policy or rider.
5.21 Subd. 7. Waiver of premiums. The insurer may offer a waiver of premium for the
5.22accelerated benefit provision in the absence of a regular waiver of premium provision
5.23being in effect. At the time the benefit is claimed, the insurer shall explain any continuing
5.24premium requirement to keep the policy in force.
5.25 Subd. 8. Discrimination. An insurer shall not unfairly discriminate among insureds
5.26with differing qualifying events covered under the policy or among insureds with similar
5.27qualifying events covered under the policy. An insurer shall not apply further conditions
5.28on the payment of the accelerated benefits other than those conditions specified in the
5.29policy or rider.
5.30 Subd. 9. Actuarial Standards. (a) The issuer may use the following financing
5.32 (1) requiring a premium charge or cost of insurance charge for the accelerated
5.33benefit. This charge shall be based on sound actuarial principles. In the case of group
5.34insurance, the additional cost may also be reflected in the experience rating.
6.1 (2) paying a present value of the face amount. The calculation shall be based on any
6.2applicable actuarial discount appropriate to the policy design. The interest rate or interest
6.3rate methodology used in the calculation shall be based on sound actuarial principles and
6.4disclosed in the contract or actuarial memorandum. The maximum interest rate used shall
6.5be no greater than the greater of:
6.6 (i) current yield on 90-day treasury bills; or
6.7 (ii) current maximum statutory adjustable policy loan interest rate.
6.8 (3) The insurer may accrue an interest charge on the amount of the accelerated
6.9benefits. The interest rate or interest rate methodology used in the calculation shall be
6.10based on sound actuarial principles and disclosed in the contract or actuarial memorandum.
6.11The maximum interest rate shall be no greater than the greater of:
6.12 (i) current yield on 90-day treasury bills; or
6.13 (ii) current maximum statutory adjustable policy loan interest rate.
6.14 The interest rate accrued on the portion of the lien that is equal in amount to the
6.15cash value of the contact at the time of the benefit acceleration shall be no more than the
6.16policy loan interest rate stated in the contract.
6.17 (b)(1) Except as provided in clause (2), when an accelerated benefit is payable, there
6.18shall be no more than a pro rata reduction in the cash value based on the percentage of
6.19death benefits accelerated to produce the accelerated benefit payment.
6.20 (2) Alternatively, the payment of accelerated benefits, any administrative expense
6.21charges, any future premiums, and any accrued interest can be considered a lien against
6.22the death benefit of the policy or rider and the access to the cash value may be restricted to
6.23any excess of the cash value over the sum of any other outstanding loans and the lien.
6.24Future access to additional policy loans could also be limited to any excess of the cash
6.25value over the sum of the lien and any other outstanding policy loans.
6.26 (c) When payment of an accelerated benefit results in a pro rata reduction in the cash
6.27value, the payment may not be applied toward repaying an amount greater than a pro rata
6.28portion of any outstanding policy loans.
6.29 Subd. 10. Actuarial disclosure and reserves. (a) A qualified actuary should
6.30describe the accelerated benefits, the risks, the expected costs, and the calculation of
6.31statutory reserved in an actuarial memorandum accompanying each state filing. The
6.32insurer shall maintain in its files descriptions of the bases and procedures used to calculate
6.33benefits payable under these provisions. These descriptions shall be made available for
6.34examination by the commissioner upon request.
6.35 (b)(1) When benefits are provided through the acceleration of benefits under group
6.36or individual life policies or riders to such policies, policy reserves shall be determined
7.1in accordance with the Standard Valuation Law. All valuation assumptions used in
7.2constructing the reserves shall be determined as appropriate for statutory valuation
7.3purposes by a member in good standing of the American Academy of Actuaries. Mortality
7.4tables and interest currently recognized for life insurance reserves by the National
7.5Association of Insurance Commissioners (NAIC) may be used as well as appropriate
7.6assumptions for the other provisions incorporated in the policy form. The actuary shall
7.7follow both actuarial standards and certification for good and sufficient reserves. Reserves
7.8in the aggregate should be sufficient to cover:
7.9 (i) policies upon which no claim has yet arisen; and
7.10 (ii) policies upon which an accelerated claim has arisen;
7.11 (2) For policies and certificates that provide actuarially equivalent benefits, no
7.12additional reserves need to be established.
7.13 (3) Policy liens and policy loans, including accrued interest, represent assets of the
7.14company for statutory reporting purposes. For a policy on which the policy lien exceeds
7.15the policy's statutory reserve liability, the excess shall be held as a nonadmitted asset.
7.16 Subd. 11. Filing requirement. The filing and prior approval of forms containing an
7.17accelerated benefit is required.
Renumber the sections in sequence and correct the internal references
Amend the title accordingly