S.D. Admin. R. 20:06:21:05.01

Current through Register Vol. 51, page 67, December 16, 2024

Section 20:06:21:05.01 - Relation of benefits to premium for accelerated death benefit on life insurance

A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

(1) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

(2) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of SDCL 58-15-31;

(3) The policy meets the disclosure requirements of §§ 20:06:21:44.01, 20:06:21:47, and 20:06:21:48;

(4) Any policy illustration that meets the applicable requirements of chapter 20:06:38; and

(5) An actuarial memorandum is filed with the Division of Insurance that includes:

(a) A description of the basis on which the long-term care rates were determined;

(b) A description of the basis for the reserves;

(c) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

(d) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue age;

(g) A statement as to whether underwriting is performed at the time of application. If underwriting is used the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(h) A description of the effect of the long-term policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

S.D. Admin. R. 20:06:21:05.01

28 SDR 157, effective 5/19/2002.

General Authority: SDCL 58-17B-8.

Law Implemented: SDCL 58-17B-8.