Long-term care benefits.

Existing law generally regulates classes of insurance, including life and long-term care insurance. Under existing law, a life insurance policy may accelerate long-term care benefits as an alternative to a life settlement. Existing law authorizes an accelerated death benefit to be added to a life insurance policy to provide for the advance payment of a part of the death proceeds if a qualifying event, including a terminal or chronic illness, occurs. Existing law imposes requirements on an insurer before the lapse or termination of a long-term care insurance policy or certificate, and requires a long-term care insurance policy or certificate to provide for reinstatement of coverage if the insured has a cognitive impairment and specified criteria are met. This bill would require a life insurance policy issued on or after January 1, 2021, that contains long-term care benefits and permits policy loans or cash withdrawals to not prohibit or limit a loan or withdrawal while the insured receives payment of long-term care benefits, except as specified. The bill would authorize the payment of an accelerated death benefit for long-term care to be applied toward repayment of a pro rata portion of an outstanding policy loan if the payment results in a pro rata reduction in the cash value of the life insurance policy. The bill would require an insurer to provide a statement to a policyholder or certificate holder at least 30 days before the first payment and no later than 30 days after every payment of an accelerated death benefit for long-term care that includes specified information, including an explanation of policy changes that would or did occur due to the payment. If an insurer approves a loan against or withdrawal from the cash value of a life insurance policy that accelerates benefits for long-term care, the bill would require the insurer to send the policyholder or certificate holder a statement with specified information, including a notice that a loan or cash withdrawal may adversely affect government benefits and may be taxable. The bill would require an applicant and agent for a universal life insurance policy that includes coverage for long-term care, as specified, to complete a disclosure relating to the risk of lapse and an offer of protection against lapse. Existing law requires a premium rate schedule for an individual or group long-term care insurance policy to be filed with and approved by the Insurance Commissioner before a policy is offered, sold, issued, or delivered. This bill would prohibit the Insurance Commissioner from approving an initial premium rate schedule for individual or group long-term care insurance that includes scheduled rate increases based on the attained age of the insured or the policy duration.