N.J. Admin. Code § 11:4-34.22

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:4-34.22 - Suitability

(a) This section shall not apply to life insurance policies and annuities that only accelerate benefits for long-term care, but shall apply to any other life insurance policy and annuity contract providing long-term care benefits.

(b) Every carrier marketing long-term care insurance shall:

1. Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

2. Train its agents in the use of its suitability standards; and

3. Maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner.

(c) To determine whether the applicant meets the standards developed by the carrier, the agent and carrier shall develop procedures that take the following into consideration:

1. The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

2. The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

3. The values, benefits and costs of the applicant's existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.

(d) The carrier and, where an agent is involved, the agent shall make reasonable efforts to obtain the information specified in (c) above. The efforts shall include presentation to the applicant, at or prior to application, of the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the carrier shall contain, at a minimum, the information in the format contained in Appendix B, in not less than 12-point type. The carrier may request the applicant to provide additional information to comply with its suitability standards. A copy of the carrier's personal worksheet shall be filed with the Commissioner.

1. A completed personal worksheet shall be returned to the carrier prior to the carrier's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their family members or dependents.

2. The sale or dissemination outside the company or agency by the carrier or agent of information obtained through the personal worksheet in Appendix B is prohibited.

(e) The carrier shall use the suitability standards it has developed pursuant to this section in determining whether the issuance of long-term care insurance coverage to an applicant is appropriate.

(f) Agents shall use the suitability standards developed by the carrier in marketing long-term care insurance.

(g) At the same time that the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format contained in subchapter Appendix C, incorporated herein by reference, in not less than 12-point type.

(h) If the carrier determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the carrier may reject the application. In the alternative, the carrier shall send the applicant a letter similar to subchapter Appendix D, incorporated herein by reference. However, if the applicant has declined to provide financial information, the carrier may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.

(i) The carrier shall report annually to the Commissioner the total number of applications received from residents of this State, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

N.J. Admin. Code § 11:4-34.22