Bill Text: CA AB2453 | 2019-2020 | Regular Session | Introduced
Bill Title: Long-term care insurance and accelerated death benefits.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-03-02 - Referred to Com. on INS. [AB2453 Detail]
Download: California-2019-AB2453-Introduced.html
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
Assembly Bill
No. 2453
| Introduced by Assembly Member Nazarian |
February 19, 2020 |
An act to amend Sections 10234.95 and 10295.12 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2453, as introduced, Nazarian.
Long-term care insurance and accelerated death benefits.
Existing law provides for the regulation of insurers by the Department of Insurance, including insurers issuing policies of long-term care insurance and policies providing accelerated death benefits. Existing law requires every insurer or other entity marketing long-term care insurance to, among other things, develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant. Existing law also requires the agent and insurer, when determining whether the applicant meets those standards, to develop procedures that take into consideration, among other things, the applicant’s ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage, and the applicant’s goals or needs with respect to long-term care and the advantages and disadvantages of
insurance to meet those goals or needs. Existing law makes these provisions inapplicable to life insurance policies that accelerate benefits for long-term care.
This bill would remove that exclusion for life insurance policies that accelerate benefits for long-term care, and would, with respect to those policies, require the procedures to also take into consideration the applicant’s goals or needs with respect to life insurance, and to take into consideration the advantages and disadvantages of the proposed insurance coverage compared to the advantages and disadvantages of a stand-alone long-term care insurance policy. The bill would require a written summary of the comparison to be presented to the applicant at the time of application and to be made part of the applicant’s file.
Under existing law, if an applicant for long-term care insurance declines to provide the financial information necessary to determine the applicant’s financial suitability, the
issuer is authorized to use some other method to verify the applicant’s intent.
This bill, instead, would require the issuer, if the applicant declines to provide the financial information and the issuer does not reject the application, to use some other method to determine if the proposed coverage is suitable for the applicant.
Existing law requires an insurer to ensure that agents offering, marketing, or selling accelerated death benefits on their behalf are able to describe the differences between benefits provided under an accelerated death benefit and benefits provided under long-term care insurance, including, among other things, the benefits under the accelerated death benefit or long-term care insurance if benefits are never needed or if benefits are needed. Under existing law, completion of California agent education or continuing education for long-term care insurance meets this requirement.
This bill, instead, would require an insurer to ensure that those agents complete California agent education or continuing education for long-term care insurance in order to meet the above requirement. The bill would require an insurer or other entity marketing accelerated death benefits to develop and use suitability standards, similar to the suitability standards described above for the purchase or replacement of long-term care insurance, to determine whether the purchase or replacement of an accelerated death benefit, or the replacement of long-term care insurance, is appropriate for the needs of the applicant. The bill would require an insurer to report annually to the commissioner the total number of applications for accelerated death benefits received from residents of this state, the number of applicants who declined to provide requested information, the number of applicants who did not meet the suitability standards, and the number of applicants who chose to
purchase the proposed insurance coverage.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 10234.95 of the Insurance Code is amended to read:10234.95.
(a)(1) Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant.
(2) Train its agents in the use of its
suitability standards.
(3) Maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner.
(b) The agent and insurer shall develop procedures that take into consideration, when determining whether the applicant meets the standards developed by the insurer, all of the following:
(1) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage.
(2) The applicant’s goals or needs with respect to long-term care and the advantages and disadvantages of
the proposed insurance coverage to meet these goals or needs.
(3) The value, benefits, and costs of the applicant’s existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.
(4) If the proposed insurance coverage is a life insurance policy that accelerates benefits for long-term care, the procedures shall also take into consideration the following:
(A) The applicant’s goals or needs with respect to life insurance.
(B) The advantages and disadvantages of the
proposed insurance coverage compared to the advantages and disadvantages of a stand-alone long-term care insurance policy. A written summary of the comparison shall be presented to the applicant at the time of application and made part of the applicant’s file.
(c) (1) The issuer, and where if an agent is involved, the agent, shall make reasonable efforts to obtain the information set out in subdivision (b). The efforts shall include presentation to the applicant, at or prior to application, of the “Long-Term Care Insurance Personal Worksheet,” contained in the Long-Term Care Insurance Model Regulations of the National Association of Insurance Commissioners. The personal worksheet used by the insurer shall
contain, at a minimum, the information in the NAIC worksheet in not less than 12-point type. The insurer may request the applicant to provide additional information to comply with its suitability standards.
(2) In the premium section of the personal worksheet, the insurer shall disclose all rate increases and rate increase requests for all policies, whether issued by the insurer or purchased or acquired from another insurer, in the United States for the current year and for nine preceding years.
(3) The premium section shall include a statement that reads as follows: “A rate guide is available that compares the policies sold by different insurers, the benefits provided in those policies, and sample premiums. The rate guide also provides a history of the rate increases, if any, for the policies issued by different insurers in each state in which they do business, for the current
year and for the nine preceding years. You can obtain a copy of this rate guide by calling the Department of Insurance’s consumer toll-free telephone number (1-800-927-HELP), by calling the Health Insurance Counseling and Advocacy Program (HICAP) toll-free telephone number (1-800-434-0222), or by accessing the Department of Insurance’s Internet Web site
internet website (www.insurance.ca.gov).” If the personal worksheet is approved prior to the availability of the rate guide, the worksheet shall indicate that the rate guide will be available beginning December 1, 2000.
(4) A copy of the issuer’s personal worksheet shall be filed and approved by the commissioner. A new personal worksheet shall be filed and approved by the commissioner each time a rate is increased in California and each time a new policy is filed for approval by the commissioner. The new personal worksheet shall disclose the amount of the rate increase in California and all prior rate increases for the nine preceding years in California as well as all prior rate increases and rate increase requests or filings in any other state for the nine preceding years. The new personal worksheet shall be used by the insurer within 60 days of approval by the commissioner in place of the previously
approved personal worksheet.
(d) A completed personal worksheet shall be returned to the issuer prior to the issuer’s consideration of the applicant for coverage, except the personal worksheet need not be returned for sale of employer group long-term care insurance to employees and their spouses and dependents.
(e) The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet or through other marketing or underwriting processes is prohibited.
(f) The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate.
(g) Agents shall use the suitability standards developed by the insurer in marketing long-term care insurance.
(h) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. Alternatively, the issuers shall send the applicant a letter similar to the “Long-Term Care Insurance Suitability Letter” contained in the Long-Term Care Model Regulations of the National Association of Insurance Commissioners. However, if the applicant has declined to provide financial information, information and the issuer does not reject the application, the issuer may
shall use some other method to verify the applicant’s intent.
determine if the proposed coverage is suitable for the applicant. Either the applicant’s returned letter or a record of the alternative method of verification shall be made part of the applicant’s file.
(i) The insurer shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number who chose to conform after receiving a suitability letter.
(j)This section shall not apply to life insurance policies that accelerate benefits for long-term care.
SEC. 2.
Section 10295.12 of the Insurance Code is amended to read:10295.12.
(a) Insurers shall ensure that agents offering, marketing, or selling accelerated death benefits on their behalf are able to describe the differences between benefits provided under an accelerated death benefit and benefits provided under long-term care insurance, as follows:(1) The difference between the benefits afforded to an insured through an accelerated death benefit and a long-term care insurance policy or rider.
(2) The differences between benefit eligibility criteria.
(3) Whether an elimination period applies to either an accelerated death benefit or long-term care insurance and a description of the elimination period.
(4) The benefits under the accelerated death benefit or long-term care insurance if benefits are never needed.
(5) The benefits under the accelerated death benefit or long-term insurance if benefits are needed.
(6) Restrictions on benefit amounts.
(7) Tax treatment of benefits.
(8) Income and death benefit considerations.
(b) Completion of Insurers shall ensure that agents offering, marketing, or selling accelerated death benefits on their behalf complete California
agent education or continuing education for long-term care insurance shall in order to meet the requirements of this section.
(c) An insurer or other entity marketing accelerated death benefits shall do all of the following:
(1) Develop and use suitability standards to determine whether the purchase or replacement of an accelerated death benefit, or the replacement of long-term care insurance, is appropriate for the needs of the applicant.
(2) Train its agents in the use of its suitability standards.
(3) Maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner.
(d) The agent and insurer shall develop procedures that take into consideration, when determining whether the applicant meets the standards developed by the insurer, all of the following:
(1) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage.
(2) The applicant’s goals or needs with respect to life insurance, as well as long-term care and other expenses that may arise from a chronic illness, and the advantages and disadvantages of the proposed insurance coverage to meet these goals or needs.
(3) The
value, benefits, and costs of the applicant’s existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.
(4) The advantages and disadvantages of the proposed insurance coverage compared to the advantages and disadvantages of long-term care insurance. A written summary of the comparison shall be presented to the applicant at the time of application and made part of the applicant’s file.
(e) The issuer, and if an agent is involved, the agent, shall make reasonable efforts to obtain the information set out in subdivision (d).
(f) The sale or dissemination outside the company or agency by the issuer or agent of information obtained through marketing or
underwriting processes is prohibited.
(g) The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing the proposed insurance coverage to an applicant is appropriate.
(h) Agents shall use the suitability standards developed by the insurer in marketing accelerated death benefits.
(i) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide information, the issuer may reject the application. If the applicant has declined to provide the information and the insurer does not reject the application, the insurer shall use some alternative method to determine if the proposed insurance coverage is suitable for the applicant. A record of an alternative method used to determine if the
proposed coverage is suitable shall be made part of the applicant’s file.
(j) The insurer shall report annually to the commissioner the total number of applications received from residents of this state, the number of applicants who declined to provide the requested information, the number of applicants who did not meet the suitability standards, and the number of applicants who chose to purchase the proposed insurance coverage.
