D.C. Mun. Regs. tit. 26, r. 26-A2622

Current through Register 71, No. 45, November 7, 2024

Rule 26-A2622 - NONFORFEITURE BENEFIT REQUIREMENT

2622.1

This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

2622.2

To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of D.C. Official Code § 31-3610:

(a) A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in subsection 2609.5; and

(b) The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder.

2622.3

If the offer required to be made under D.C. Official Code § 31-3610 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section.

2622.4

After rejection of the offer required under D.C. Official Code § 31-3610, for individual and group policies without nonforfeiture benefits issued after the effective date of this section, the insurer shall provide a contingent benefit upon lapse.

2622.5

In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

2622.6

The contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase. Triggers are as follows:

Triggers for a Substantial Premium Increase
Percent Increase Over
Issue Age	Initial Premium
29 and under	200%
30-34	190%
35-39	170%
40-44	150%
45-49	130%
50-54	110%
55-59	90%
60	70%
61	66%
62	62%
63	58%
64	54%
65	50%
66	48%
67	46%
68	44%
69	42%
70	40%
71	38%
72	36%
73	34%
74	32%
75	30%
76	28%
77	26%
78	24%
79	22%
80	20%
81	19%
82	18%
83	17%
84	16%
85	15%
86	14%
87	13%
88	12%
89	11%
90 and over	10%.

2622.7

On or before the effective date of a substantial premium increase as defined in section 2622.6 above, the insurer shall:

(a) Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

(b) Offer to convert to a paid-up status with a shortened benefit period in accordance with the terms of subsection 2609.5. This option may be elected at any time during the 120-day period referenced in subsection 2609.4(c); and

(c) Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in subsection 2609.4(c) shall be deemed to be the election of the offer to convert in paragraph (b) above.

2622.8

Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse, are described as follows:

(a) For purposes of this subsection, attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age fifty (50), and at least three percent (3%) per year beyond age fifty (50), and

(b) For purposes of this subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increase thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in paragraph (c).

(c) The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of subsection 2609.6.

(d) The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three (3) years as well as thereafter.

(e) Notwithstanding the above paragraph, with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

(1) The end of the tenth year following the policy or certificate issue date; or

(2) The end of the second year following the date the policy or certificate is no longer subject to attained age rating.

(f) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.

2622.9

All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status.

2622.10

There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies.

2622.11

The requirements set forth in this section shall become effective twelve (12) months after adoption of this provision and shall apply as follows:

(a) Except as provided in paragraph (b), the provisions of this section apply to any long-term care policy issued in the District of Columbia on or after the effective date of this amended regulation.

(b) For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in D.C. Code § 35-4901, which policy was in force at the time this amended regulation became effective, the provisions of this section shall not apply.

2622.12

Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of section 2606 treating the policy as a whole.

2622.13

To determine whether contingent nonforfeiture upon lapse provisions are triggered under subsection 2609.4(c), a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.

2622.14

A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets/the following requirements:

(a) The nonforfeiture provision shall be appropriately captioned;

(b) The nonforfeiture provision shall provide a benefit.available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying contracts approved by the Commissioner for the same contract form; and

(c) The nonforfeiture provision shall provide at least one of the following:

(1) Reduced paid-up insurance;

(2) Extended term insurance;

(3) Shortened benefit period; or

(4) Other similar offerings approved by the Commissioner.

D.C. Mun. Regs. tit. 26, r. 26-A2622

Final Rulemaking published at 52 DCR 10902 (December 16, 2005)