Sec. 38a-457. Accelerated benefits of life insurance policies.
Sec. 38a-457. Accelerated benefits of life insurance policies. (a) As used in this
section:
(1) "Accelerated benefits" means benefits payable under a life insurance policy sold
in this state: (A) During the lifetime of the insured, in a lump sum or in periodic payments,
as specified in the policy, provided upon the occurrence of a qualifying event, as defined
in subparagraph (C) of subdivision (3) of this subsection, no such benefits shall be
payable in periodic payments, (B) upon the occurrence of a qualifying event, as defined
in the policy, and certified by a physician who is licensed under the laws of a state or
territory of the United States, or such other foreign or domestic jurisdiction as the Insurance Commissioner may approve and (C) which reduce the death benefits otherwise
payable under the life insurance policy.
(2) "Insurance policy" or "policy" means an insurance policy or certificate or rider
or endorsement thereto.
(3) "Qualifying event" means (A) a medically determinable condition suffered by
the insured which can be expected to result in death in a relatively short period of time,
such as twelve months and may include, but is not limited to, coronary artery disease,
myocardial infarction, stroke, kidney failure or liver disease or (B) a medical condition
which would, in the absence of extensive or extraordinary medical treatment, result in
death in a relatively short period of time, such as twelve months, or (C) a medically
determinable condition suffered by the insured which has caused the insured to be confined for at least six months in an institution which provides necessary care or treatment
of an injury, illness or loss of functional capacity rendered by a certified or licensed health
care provider in a setting other than an acute care hospital, and it has been medically
determined that such insured is expected to remain confined in such institution until
death.
(b) On and after October 1, 1990, any life insurance company or fraternal benefits
society doing business in this state may issue accelerated benefits life insurance policies,
as described in this section, and certificates, riders or endorsements to existing life
insurance policies which provide accelerated benefits, as described in this section.
(c) An accelerated benefits life insurance policy shall not include a policy providing
for disability income protection coverage or long-term care coverage, as defined in
sections 38a-501 and 38a-528.
(d) (1) Death benefits may not be reduced more than the amount of the accelerated
benefits paid plus any applicable actuarial discount appropriate to the policy design for
policies without additional premium payments. When an accelerated benefit is paid, the
amount paid may be considered as (A) a pro rata reduction in cash value or death benefits,
or both, or (B) a lien against the death benefit of the contract and the access to the cash
value shall be restricted to any excess of the cash value over the sum of other outstanding
loans and the lien.
(2) The accidental death benefit, if any, in the policy shall not be affected by the
payment of the accelerated benefit.
(e) All accelerated benefits policies shall comply with the following disclosure requirements:
(1) The face of every accelerated benefits policy shall contain: (A) A description
of coverage which uses the terminology "accelerated" and (B) the following statement:
"Benefits as specified under this policy will be reduced upon receipt of an accelerated
benefit."
(2) Disclosure is required, at the time of application and at the time the accelerated
benefits payment request is submitted, of the potential tax implications of receiving this
payout. The disclosure statement shall indicate that the receipt of accelerated benefits
may be taxable and that the insured should seek assistance from their personal tax advisor. Such disclosure shall be prominently displayed on the first page of the policy.
(3) Prior to or concurrent with the application, the applicant shall be given a written
disclosure including, but not limited to, a brief description of the accelerated benefit,
the effect of the payment of an accelerated benefit on the policy's cash value, death
benefit, premium, policy loans and policy liens, and definitions of the conditions or
occurrences triggering payment of the accelerated benefits. In the event of direct mail
solicitation, the disclosure shall be made upon acceptance of the application.
(4) The insurer shall disclose in its solicitation any separate identifiable premium
for the accelerated benefit. Those insurers indicating that this accelerated benefit is
offered without additional premium shall furnish a written explanation to the Insurance
Commissioner when filing the product.
(5) Prior to or concurrent with the request for accelerated death benefits, the applicant shall be given an illustration demonstrating the effect of the payment of an accelerated benefit on the policy's cash value, death benefit, premium, policy loans and policy liens.
(f) The insurer shall file with the Insurance Department the information concerning
the manner by which the actuarial discount and mortality charge, if any, is calculated
for the accelerated benefit. The commissioner, if he determines that such discount or
mortality charge is excessive, shall hold a hearing to determine such reasonable charges.
(g) Any life insurance policy or any certificate, rider or endorsement thereto, which
provides accelerated benefits pursuant to the occurrence of a qualifying event, as defined
in subparagraph (C) of subdivision (3) of subsection (a) of this section, shall contain
the following statement printed in a conspicuous and readily discernible manner: "This
policy is not a long-term care policy as defined in sections 38a-501 and 38a-528 of the
Connecticut General Statutes."
(h) The Insurance Commissioner may adopt, in accordance with chapter 54, such
regulations as he deems necessary for the purpose of this section, including the authority
to establish the minimum or maximum benefit, if any, payable under an accelerated
benefit policy. Prior to the effective date of any such regulations, any such policy may
be filed with the commissioner and, at his discretion, may be approved.
(P.A. 90-200, S. 1; P.A. 92-60, S. 18.)
History: P.A. 92-60 made technical corrections for statutory consistency.