Bill Text: MN SF2142 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Life insurance contracts accelerated benefits use for long-term care and life insurance cash value use for long-term care insurance premiums payments authority
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced - Dead) 2012-03-01 - Referred to Commerce and Consumer Protection [SF2142 Detail]
Download: Minnesota-2011-SF2142-Introduced.html
1.2relating to insurance; permitting accelerated benefits available under a life
1.3insurance policy to include long-term care coverage; permitting use of life
1.4insurance cash value to pay premiums on long-term care insurance; amending
1.5Minnesota Statutes 2010, section 61A.072, subdivisions 1, 5; proposing coding
1.6for new law in Minnesota Statutes, chapter 61A.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 61A.072, subdivision 1, is amended to
1.9read:
1.10 Subdivision 1. Definitions. (a) "Accelerated benefits" covered under this section are
1.11benefits payable under the life insurance contract:
1.12 (1) to a policyholder or certificate holder, during the lifetime of the insured, in the
1.13anticipation of death or upon the occurrence of a specified life-threatening or catastrophic
1.14condition as defined by the policy or rider;
1.15 (2) that reduce the death benefit otherwise payable under the life insurance contract;
1.16and
1.17 (3) that are payable upon the occurrence of a single qualifying event that results in
1.18the payment of a benefit amount fixed at the time of acceleration.
1.19 (b) "Qualifying event" means one or more of the following:
1.20 (1) a medical condition that would result in a drastically limited life span as specified
1.21in the contract;
1.22 (2) a medical condition that has required or requires extraordinary medical
1.23intervention, such as, but not limited to, major organ transplant or continuous artificial life
1.24support without which the insured would die;
2.1 (3) a condition that usually requires continuous confinement in an eligible institution
2.2as defined in the contract if the insured is expected to remain there for the rest of the
2.3insured's life;
2.4 (4) a medical condition that would, in the absence of extensive or extraordinary
2.5medical treatment, result in a drastically limited life span. Such conditions may include,
2.6but are not limited to, one or more of the following:
2.7 (i) coronary artery disease resulting in an acute infarction or requiring surgery;
2.8 (ii) permanent neurological deficit resulting from cerebral vascular accident;
2.9 (iii) end stage renal failure;
2.10 (iv) Acquired Immune Deficiency Syndrome; or
2.11 (v) other medical conditions that the commissioner shall approve for any particular
2.12filing;or
2.13 (5) a determination by a health care provider that the insured is in need of long-term
2.14care; or
2.15(6) other qualifying events that the commissioner approves for a particular filing.
2.16EFFECTIVE DATE.This section is effective the day following final enactment
2.17and applies to life insurance contracts issued on or after that date.
2.18 Sec. 2. Minnesota Statutes 2010, section 61A.072, subdivision 5, is amended to read:
2.19 Subd. 5. Disclosures. (a) The terminology "accelerated benefit" shall be included
2.20in the descriptive title. Products regulated under this section shall not be described or
2.21marketed as long-term care insurance or as providing long-term care benefits, unless the
2.22product provides long-term care benefits in compliance with chapter 62S.
2.23 (b) A disclosure statement is required at the time of application for the policy or
2.24rider and at the time the accelerated benefit payment request is submitted that receipt of
2.25these accelerated benefits may be taxable and that assistance should be sought from a
2.26personal tax advisor. The disclosure statement shall be prominently displayed on the first
2.27page of the policy or rider and any other related documents.
2.28 (c)(1) A written disclosure including, but not necessarily limited to, a brief
2.29description of the accelerated benefit and definitions of the conditions or occurrences
2.30triggering payment of the benefits shall be given to the applicant. The description shall
2.31include an explanation of any effect of the payment of a benefit on the policy's cash value,
2.32accumulation account, death benefit, premium, policy loans, and policy liens.
2.33 (i) In the case of agent-solicited insurance, the agent shall provide the disclosure
2.34form to the applicant prior to or concurrently with the application. Acknowledgment of
2.35the disclosure shall be signed by the applicant and writing agent.
3.1 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
3.2the disclosure form to the applicant at the time the policy is delivered, with a notice that
3.3a full premium refund shall be received if the policy is returned to the company within
3.4the free look period.
3.5 (iii) In the case of group insurance policies, the disclosure form shall be contained
3.6as part of the certificate of coverage or any related document furnished by the insurer
3.7for the certificate holder.
3.8 (2) If there is a premium or cost of insurance charge, the insurer shall give the
3.9applicant a generic illustration numerically demonstrating any effect of the payment of a
3.10benefit on the policy's cash value, accumulation account, death benefit, premium, policy
3.11loans, and policy liens.
3.12 (i) In the case of agent-solicited insurance, the agent shall provide the illustration to
3.13the applicant prior to or concurrently with the application.
3.14 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
3.15the illustration to the applicant at the time the policy is delivered.
3.16 (iii) In the case of group insurance policies, the disclosure form shall be contained
3.17as part of the certificate of coverage or any related document furnished by the insurer
3.18for the certificate holder.
3.19 (3) Disclosure of premium charge.
3.20 (i) An insurer with financing options other than as described in subdivision 9,
3.21paragraph (a), clauses (2) and (3), shall disclose to the policy owner any premium or cost
3.22of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort
3.23to assure that the certificate holder is aware of any additional premium or cost of insurance
3.24charge if the certificate holder is required to pay a charge.
3.25 (ii) An insurer shall furnish an actuarial demonstration to the state insurance
3.26department when filing the product disclosing the method of arriving at its cost for the
3.27accelerated benefit.
3.28 (4) The insurer shall disclose to the policy owner any administrative expense charge.
3.29The insurer shall make a reasonable effort to assure that the certificate holder is aware of
3.30any administrative expense charge if the certificate holder is required to pay the charge.
3.31 (d) When a policy owner or certificate holder requests an acceleration, the insurer
3.32shall send a statement to the policy owner or certificate holder and irrevocable beneficiary
3.33showing any effect that the payment of the accelerated benefit will have on the policy's
3.34cash value, accumulation account, death benefit, premium, policy loans, and policy liens.
3.35The statement shall disclose that receipt of accelerated benefit payments may adversely
3.36affect the recipient's eligibility for Medicaid or other government benefits or entitlements.
4.1In addition, receipt of an accelerated benefit payment may be taxable and assistance
4.2should be sought from a personal tax advisor. When a previous disclosure statement
4.3becomes invalid as a result of an acceleration of the death benefit, the insurer shall send
4.4a revised disclosure statement to the policy owner or certificate holder and irrevocable
4.5beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue an
4.6amended schedule page to the policyholder or notify the certificate holder under a group
4.7policy to reflect any new reduced in-force face amount of the contract.
4.8EFFECTIVE DATE.This section is effective the day following final enactment
4.9and applies to life insurance contracts issued on or after that date.
4.10 Sec. 3. [61A.075] LONG-TERM CARE BENEFITS; USE OF LIFE INSURANCE
4.11CASH VALUE PERMITTED.
4.12An owner of a life insurance policy that has a cash value may borrow against that
4.13cash value as necessary to pay premiums on long-term care insurance that complies with
4.14chapter 62S.
4.15EFFECTIVE DATE.This section is effective the day following final enactment.
1.3insurance policy to include long-term care coverage; permitting use of life
1.4insurance cash value to pay premiums on long-term care insurance; amending
1.5Minnesota Statutes 2010, section 61A.072, subdivisions 1, 5; proposing coding
1.6for new law in Minnesota Statutes, chapter 61A.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 61A.072, subdivision 1, is amended to
1.9read:
1.10 Subdivision 1. Definitions. (a) "Accelerated benefits" covered under this section are
1.11benefits payable under the life insurance contract:
1.12 (1) to a policyholder or certificate holder, during the lifetime of the insured, in the
1.13anticipation of death or upon the occurrence of a specified life-threatening or catastrophic
1.14condition as defined by the policy or rider;
1.15 (2) that reduce the death benefit otherwise payable under the life insurance contract;
1.16and
1.17 (3) that are payable upon the occurrence of a single qualifying event that results in
1.18the payment of a benefit amount fixed at the time of acceleration.
1.19 (b) "Qualifying event" means one or more of the following:
1.20 (1) a medical condition that would result in a drastically limited life span as specified
1.21in the contract;
1.22 (2) a medical condition that has required or requires extraordinary medical
1.23intervention, such as, but not limited to, major organ transplant or continuous artificial life
1.24support without which the insured would die;
2.1 (3) a condition that usually requires continuous confinement in an eligible institution
2.2as defined in the contract if the insured is expected to remain there for the rest of the
2.3insured's life;
2.4 (4) a medical condition that would, in the absence of extensive or extraordinary
2.5medical treatment, result in a drastically limited life span. Such conditions may include,
2.6but are not limited to, one or more of the following:
2.7 (i) coronary artery disease resulting in an acute infarction or requiring surgery;
2.8 (ii) permanent neurological deficit resulting from cerebral vascular accident;
2.9 (iii) end stage renal failure;
2.10 (iv) Acquired Immune Deficiency Syndrome; or
2.11 (v) other medical conditions that the commissioner shall approve for any particular
2.12filing;
2.13 (5) a determination by a health care provider that the insured is in need of long-term
2.14care; or
2.15(6) other qualifying events that the commissioner approves for a particular filing.
2.16EFFECTIVE DATE.This section is effective the day following final enactment
2.17and applies to life insurance contracts issued on or after that date.
2.18 Sec. 2. Minnesota Statutes 2010, section 61A.072, subdivision 5, is amended to read:
2.19 Subd. 5. Disclosures. (a) The terminology "accelerated benefit" shall be included
2.20in the descriptive title. Products regulated under this section shall not be described or
2.21marketed as long-term care insurance or as providing long-term care benefits, unless the
2.22product provides long-term care benefits in compliance with chapter 62S.
2.23 (b) A disclosure statement is required at the time of application for the policy or
2.24rider and at the time the accelerated benefit payment request is submitted that receipt of
2.25these accelerated benefits may be taxable and that assistance should be sought from a
2.26personal tax advisor. The disclosure statement shall be prominently displayed on the first
2.27page of the policy or rider and any other related documents.
2.28 (c)(1) A written disclosure including, but not necessarily limited to, a brief
2.29description of the accelerated benefit and definitions of the conditions or occurrences
2.30triggering payment of the benefits shall be given to the applicant. The description shall
2.31include an explanation of any effect of the payment of a benefit on the policy's cash value,
2.32accumulation account, death benefit, premium, policy loans, and policy liens.
2.33 (i) In the case of agent-solicited insurance, the agent shall provide the disclosure
2.34form to the applicant prior to or concurrently with the application. Acknowledgment of
2.35the disclosure shall be signed by the applicant and writing agent.
3.1 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
3.2the disclosure form to the applicant at the time the policy is delivered, with a notice that
3.3a full premium refund shall be received if the policy is returned to the company within
3.4the free look period.
3.5 (iii) In the case of group insurance policies, the disclosure form shall be contained
3.6as part of the certificate of coverage or any related document furnished by the insurer
3.7for the certificate holder.
3.8 (2) If there is a premium or cost of insurance charge, the insurer shall give the
3.9applicant a generic illustration numerically demonstrating any effect of the payment of a
3.10benefit on the policy's cash value, accumulation account, death benefit, premium, policy
3.11loans, and policy liens.
3.12 (i) In the case of agent-solicited insurance, the agent shall provide the illustration to
3.13the applicant prior to or concurrently with the application.
3.14 (ii) In the case of a solicitation by direct response methods, the insurer shall provide
3.15the illustration to the applicant at the time the policy is delivered.
3.16 (iii) In the case of group insurance policies, the disclosure form shall be contained
3.17as part of the certificate of coverage or any related document furnished by the insurer
3.18for the certificate holder.
3.19 (3) Disclosure of premium charge.
3.20 (i) An insurer with financing options other than as described in subdivision 9,
3.21paragraph (a), clauses (2) and (3), shall disclose to the policy owner any premium or cost
3.22of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort
3.23to assure that the certificate holder is aware of any additional premium or cost of insurance
3.24charge if the certificate holder is required to pay a charge.
3.25 (ii) An insurer shall furnish an actuarial demonstration to the state insurance
3.26department when filing the product disclosing the method of arriving at its cost for the
3.27accelerated benefit.
3.28 (4) The insurer shall disclose to the policy owner any administrative expense charge.
3.29The insurer shall make a reasonable effort to assure that the certificate holder is aware of
3.30any administrative expense charge if the certificate holder is required to pay the charge.
3.31 (d) When a policy owner or certificate holder requests an acceleration, the insurer
3.32shall send a statement to the policy owner or certificate holder and irrevocable beneficiary
3.33showing any effect that the payment of the accelerated benefit will have on the policy's
3.34cash value, accumulation account, death benefit, premium, policy loans, and policy liens.
3.35The statement shall disclose that receipt of accelerated benefit payments may adversely
3.36affect the recipient's eligibility for Medicaid or other government benefits or entitlements.
4.1In addition, receipt of an accelerated benefit payment may be taxable and assistance
4.2should be sought from a personal tax advisor. When a previous disclosure statement
4.3becomes invalid as a result of an acceleration of the death benefit, the insurer shall send
4.4a revised disclosure statement to the policy owner or certificate holder and irrevocable
4.5beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue an
4.6amended schedule page to the policyholder or notify the certificate holder under a group
4.7policy to reflect any new reduced in-force face amount of the contract.
4.8EFFECTIVE DATE.This section is effective the day following final enactment
4.9and applies to life insurance contracts issued on or after that date.
4.10 Sec. 3. [61A.075] LONG-TERM CARE BENEFITS; USE OF LIFE INSURANCE
4.11CASH VALUE PERMITTED.
4.12An owner of a life insurance policy that has a cash value may borrow against that
4.13cash value as necessary to pay premiums on long-term care insurance that complies with
4.14chapter 62S.
4.15EFFECTIVE DATE.This section is effective the day following final enactment.
