Sec. 31.14.01.05. Disclosure

A. Riders and Endorsements.

(1) Except for riders or endorsements by which the insurer fulfills a request made in writing by the policyholder under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage of the policy shall require signed acceptance by the policyholder.

(2) After the date of policy issue, any rider or endorsement which increases benefits or coverage and which will require an increase in premium shall be agreed to in writing and signed by the insured, unless the increased benefits are required by law.

(3) When a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge shall be set forth in the policy or in the rider or endorsement.

B. Payment of Benefits. A long-term care insurance policy which provides for the payment of benefits based on standards described as "usual and customary", "reasonable and customary", or words of similar import shall include a definition of these terms. The outline of coverage accompanying the policy shall include an explanation of these terms if used.

C. Preexisting Condition Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear in a separate paragraph of the policy or certificate under the heading "Preexisting Condition Limitations".

D. Disclosure of Tax Consequences.

(1) This section is not applicable to qualified long-term care insurance contracts.

(2) If a life insurance policy or rider to a life insurance policy provides an accelerated death benefit for long-term care, a disclosure statement shall be provided by the insurer at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted.

(3) The disclosure statement required in §D(2) of this regulation shall state that:

(i) Receipt of the accelerated benefits may be taxable; and

(ii) Assistance should be sought from a personal tax advisor.

(4) The disclosure statement required in §D(2) of this regulation shall be prominently displayed on the first page of the policy or rider and any other related documents.

E. Benefit Triggers

(1) An insurer shall:

(a) Use activities of daily living and cognitive impairment to measure an insured's need for long-term care; and

(b) Describe in the policy or certificate in a separate provision the benefit triggers described in §E(1)(a) of this regulation.

(2) Additional Benefit Triggers.

(a) If the policy or certificate contains any additional benefit triggers other than described in §E(1) of this regulation, these triggers shall be described in the same provision described in §E(1)(b) of this regulation.

(b) If the additional benefit triggers differ for different benefits, explanation of the trigger shall accompany each benefit description.

(3) If the contract or certificate requires that an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this requirement shall appear in the provision described in §E(1)(b) of this regulation.

F. Each qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage that the policy is intended to be a qualified long-term care insurance contract under §7702B(b) of the Internal Revenue Code of 1986, as amended.

G. Each nonqualified long-term care insurance contract shall include a disclosure statement in the policy and the outline of coverage that the policy is not intended to be a qualified long-term care insurance contract.