Sec.38a-457-5. Disclosures

(a) Descriptive title. The face of every accelerated benefits policy shall contain the following:

(1) a description of coverage which uses the terminology “accelerated”;

(2) the following statement: “Benefits as specified under this policy will be reduced upon receipt of an accelerated benefit.”

Accelerated benefits products shall not be described or marketed as long-term care insurance or as providing long-term care benefits.

(b) Tax consequences. 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 the extent to which the receipt of accelerated benefits may be taxable and that the insured should seek assistance from his personal tax advisor. Such disclosure shall be prominently displayed on the first page of the policy or rider in bold-face type or contrasting color.

(c) Solicitations.

(1) 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.

(2) 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 Commissioner when filing the product for approval.

(3) 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.

(4) The insurer shall file with the Commissioner 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.

(5) 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 section 38a-457-1 (c) (3) shall contain the following statement printed in a conspicuous and readily discernable manner: “This policy is not a long-term care policy as defined in Sections 38a-501 and 38a-528 of the Connecticut General Statutes.”

(6) Ten-day free look. Any accelerated benefits rider which provides for any additional premium payments with an effective date subsequent to the effective date of the life insurance policy shall have printed thereon or attached thereto a notice stating, in substance, that the accelerated benefits rider may be returned by the insured for cancellation by delivering or mailing the rider to the insurer or to the producer through whom it was effected, at any time within ten days after receipt of the rider by the insured, and that upon the delivery or mailing the rider shall be void ab initio.

(7) Effect of the benefit payment. When a policyowner or certificateholder requests an acceleration, the insurer shall send a statement to the policyowner or certificateholder, assignee and irrevocable beneficiary showing any effect that the payment of the accelerated benefit will have on the policy's cash value, accumulation account, death benefit, premium, policy loans and policy liens. The statement shall disclose what adverse affect, if any, the actual or constructive receipt of accelerated benefit payments may have on the recipient's eligibility for Medicaid or other government benefits or entitlements. When a previous disclosure statement becomes invalid as a result of an acceleration of the death benefit, the insurer shall send a revised disclosure statement to the policyowner or certificateholder, assignee and irrevocable beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue a new or amended schedule page to the policy to reflect any new, reduced in-force face amount of the contract.

(Effective October 23, 1992; Amended September 9, 2013)