Section R20-6-1007. Required Disclosure Provisions

A.      Riders and endorsements. Except for riders or endorsements by which an insurer effectuates a request made in writing by the insured under an individual long-term care insurance pol- icy, if an insurer adds a rider or endorsement to an individual long-term care insurance policy after date of issue or at rein- statement or renewal that reduces or eliminates benefits or coverage in the policy, the insurer shall require signed accep- tance by the individual insured. After the date of policy issue, any rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term shall require the signed written agreement of the insured unless the increased benefits or coverage are required by law. If the insurer charges a separate additional premium for bene- fits provided in connection with riders or endorsements, pre- mium charge shall be set forth in the policy, rider, or endorsement.

B.       Payment of Benefits. A long-term care insurance policy that provides for the payment of benefits based on standards described as “usual and customary,” “reasonable and custom- ary” or words of similar import shall define the terms and explain them in its accompanying outline of coverage.

C.      Disclosure of tax consequences. For life insurance policies that provide an accelerated benefit for long-term care, an insurer shall provide a disclosure statement at the time of application for the policy or rider and at the time the acceler- ated benefit payment request is submitted, that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax adviser. The disclosure state- ment shall be prominently displayed on the first page of the policy or rider and any other related documents.

D.      Benefit triggers. A long-term care insurance policy shall use activities of daily living and cognitive impairment to measure an insured’s need for long-term care. The long-term care insur- ance policy or certificate shall describe these terms and provi- sions in a separate paragraph in the policy or certificate labeled “Eligibility for the Payment of Benefits” that includes and explains:

1.        Any additional benefit triggers;

2.        Benefit triggers that result in payment of different benefit levels;

3.        Any requirement that an attending physician or other specified person certify a certain level of functional dependency for the insured to be eligible for benefits.

E.       A long-term care insurance policy or certificate shall contain a disclosure statement in the policy and in the outline of cover- age indicating whether it is intended to be a qualified long- term care insurance contract as specified in the outline of cov- erage in Appendix J, paragraph 3.

Historical Note

Adopted effective August 10, 1992 (Supp. 92-3). R20-6- 1007 recodified from R4-14-1007 (Supp. 95-1). Former Section R20-6-1007 renumbered to R20-6-1010; new Section R20-6-1007 renumbered from R20-6-1006 and amended by final rulemaking at 10 A.A.R. 4661, effec- tive January 3, 2005 (Supp. 04-4).