Sec. 31.14.01.07. Person To Be Notified

A. Except as provided in §E of this regulation, an insurer may not issue an individual long-term care insurance policy or certificate to an insured until the insurer has received from the applicant either a written:

(1) Designation of at least one person in addition to the insured who is to receive notice of termination of the policy or certificate for nonpayment of premium; or

(2) Waiver dated and signed by the applicant electing not to designate additional persons to receive notice of nonpayment of premium.

B. The written designation shall be on a form provided by the insurer and shall:

(1) Provide space clearly designated for listing at least one person; and

(2) Include a space for listing the full name and home address of the designated person.

C. If the applicant elects to waive the right to designate additional persons to receive notice of nonpayment of premium, the insurer shall use a waiver form that states: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice."

D. An insurer shall notify the insured of the right to change the written designation described in §§A-C of this regulation, at least once every 2 years.

E. Payroll or Pension Deduction Plans.

(1) If the policyholder or certificate holder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the insurer is not required to satisfy the requirements contained in §§A - C of this regulation until 60 days after the policyholder or certificate holder is no longer on a payroll or pension deduction plan.

(2) The application or enrollment form for a long-term care insurance policy or certificate through a payroll or pension deduction plan shall clearly indicate the payment plan selected by the applicant.

F. Lapse or Termination for Nonpayment of Premium.

(1) Notice of Lapse.

(a) An individual long-term care policy or certificate may not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, provides notice to the insured and to those persons designated under §§A and B of this regulation.

(b) The notice required by §F(1) of this regulation shall be provided by the insurer to the addresses provided by the insured for purposes of receiving notice of lapse or termination.

(2) The notice required in §F(1) of this regulation:

(a) Shall be given by first class United States mail, postage prepaid; and

(b) May not be given until 30 days after a premium is due and unpaid.

(3) The notice required in §F(1) of this regulation shall be deemed to be given as of 5 days after the date of mailing.

G. Reinstatement.

(1) A long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse, if the insurer is provided proof that, before the grace period contained in the policy expired, the policyholder or certificate holder:

(a) Was cognitively impaired; or

(b) Had a loss of functional capacity.

(2) The reinstatement option described in §G(1) of this regulation shall be available to the insured if it is requested within 5 months after termination and shall allow for the collection of past due premium, if appropriate.

(3) The standard of proof of cognitive impairment or loss of functional capacity referenced in §G(1) of this regulation may not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.