Insurance: disability insurance: life insurance: accelerated death benefit.

Existing law governs the business of insurance, and defines various types of insurance for these purposes, including life insurance and disability insurance. Existing law generally makes the requirements imposed on disability insurance contracts inapplicable to life insurance, endowment, and annuity contracts, or supplemental contracts thereto, that provide supplemental benefits in case of death or dismemberment or loss of sight by accident, operate to safeguard contracts against lapse, or give a special surrender benefit or an accelerated death benefit, as specified. Existing law requires that the supplemental benefit provide that the insurer may require that the insured provide written proof of occurrence or loss no less than 90 days after the termination of the period for which the insurer is liable, and, in the case of claim for any other occurrence or loss, within 90 days after the date of the occurrence or loss. Existing law also requires that supplemental benefits specify any applicable exclusions and limits those exclusions to, among other things, a condition or loss caused by engaging in an illegal occupation. This bill would instead require that the supplemental benefit provide that the insurer may require, in the case of a claim for which the supplemental benefit provides any periodic payment contingent upon continuing occurrence or loss, that the insured provide written proof of occurrence or loss no less than 90 days after the termination of the period for which the insurer is liable, and, in the case of claim for any other occurrence or loss, that the insured provide written proof of occurrence or loss within 90 days after the date of the occurrence or loss. The bill would also include a condition or loss caused or substantially contributed to by engaging in aviation, other than as a fare-paying passenger, to the list of allowable exclusions to supplemental benefits. Existing law provides that supplemental benefits that operate to safeguard life insurance contracts against lapse are defined as a waiver of premium benefit or a waiver of monthly deduction benefit, as applicable, in which the insurer waives the premium or monthly deduction for a life insurance contract when the insured becomes totally disabled, as defined by the supplemental benefit, and in which the waiver continues until the end of the insured's disability, or for the period specified by the supplemental benefit, consistent with specified requirements. Under those requirements, the waiver of premium or monthly deduction benefit continues for the period specified by the supplemental benefit, but may not be less favorable to the insured than certain terms, including that if the insured's total disability begins before the insured attains 60 years of age, that the insurer waive all premiums or monthly deductions due for the period of the total disability, and if the total disability extends to the insured's attainment of 65 years of age, that the insurer waive all further premiums or monthly deductions due. This bill would change the above terms by instead requiring the insurer, if the insured's total disability begins before the insured attains 60 years of age, to waive all premiums or monthly deductions due for the period that the insured continues to be totally disabled. Existing law defines an accelerated death benefit as a provision, endorsement, or rider added to a life insurance policy that provides for the advance payment of any part of the death proceeds, payable upon the occurrence of a qualifying event, as provided. The insurer is required to provide the policyholder or certificate holder with a report, at least monthly, of any accelerated death benefits paid out during the prior month, an explanation of any changes to the policy or certificate, death benefits, and cash values on account of the benefits being paid out, and the amount of the remaining benefits that can be accelerated at the end of the prior month. This bill would require the insurer to provide the report no less than one month after the payment of the benefit, and would delete the requirement that the report be provided on a monthly basis. Existing law requires term life insurance policies to include a prominent statement on page one that the accelerated death benefit terminates with the policy. This bill would instead require, if an accelerated death benefit is offered with an underlying term life insurance policy, that the accelerated death benefit include the required statement that the benefit terminates with the policy.