CHAPTER 700b
LIFE INSURANCE, ANNUITIES, BURIAL CONTRACTS
AND LIFE SETTLEMENTS

PART I
LIFE INSURANCE AND ANNUITIES

      Sec. 38a-430. (Formerly Sec. 38-135a). Approval of form of life insurance and annuity policies. Optional health insurance riders. (a) No life insurance or annuity policy or contract shall be delivered or issued for delivery to any person in this state, nor shall any application, rider or endorsement be used in connection therewith, until a copy of the form thereof shall have been filed with and approved by the commissioner. The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, establishing a procedure for review of such policies. The commissioner shall issue an order disapproving the use of any such form at any time if it does not comply with the requirements of law, or if it contains a provision or provisions that are unfair or deceptive or that encourage misrepresentation of the policy. The commissioner shall specify the reason for the commissioner's disapproval. The provisions of section 38a-19 shall apply to any such order issued by the commissioner.

      (b) Nothing in this chapter shall preclude the issuance of a life insurance contract including, but not limited to, a long-term care policy as provided in section 38a-458, that includes an optional health insurance rider, provided the optional health insurance rider is filed with and approved by the Insurance Commissioner pursuant to section 38a-481. Any company offering such policies for sale in this state shall be licensed to sell health insurance in this state pursuant to the provisions of section 38a-41.

      (1967, P.A. 528; P.A. 88-326, S. 3; P.A. 96-51, S. 1; P.A. 11-19, S. 5.)

      History: P.A. 88-326 required the commissioner to adopt regulations establishing a procedure for policy review and rephrased existing provisions; Sec. 38-135a transferred to Sec. 38a-430 in 1991; P.A. 96-51 added Subsec. (b) to permit optional health insurance riders; P.A. 11-19 made technical changes.

      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, (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 that 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, (B) a medical condition that 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 resulted in the insured being considered a chronically ill individual for the purposes of Section 101(g) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, and which has caused the insured to be confined for at least six months in such insured's place of residence or in an institution that provides necessary care or treatment of an injury, illness or loss of functional capacity, and for which it has been medically determined that such insured is expected to remain confined in such place of residence or 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 that 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 the commissioner deems necessary for the purpose of this section, including the medically determinable conditions that are considered to be qualifying events as set forth in subdivision (3) of subsection (a) of this section, and 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 the commissioner's discretion, may be approved.

      (P.A. 90-200, S. 1; P.A. 92-60, S. 18; P.A. 09-216, S. 1; P.A. 11-19, S. 6.)

      History: P.A. 92-60 made technical corrections for statutory consistency; P.A. 09-216 amended Subsec. (a) by redefining "accelerated benefits" in Subdiv. (1) and "qualifying event" in Subdiv. (3), made a technical change in Subsec. (b), and amended Subsec. (h) by authorizing commissioner to adopt regulations re medically determinable conditions considered to be qualifying events and making technical changes, effective January 1, 2010; P.A. 11-19 made a technical change in Subsec. (e)(1).