Weekly Tip: Accelerated Death Benefit Terminal Illness Requirement

 

Weekly Tips

 Accelerated Death Benefit Terminal Illness Requirement

1/13/2016

Are you considering filing an Accelerated Death Benefit Rider with the Insurance Compact?  This week we want to point out an important and frequently misunderstood requirement under the Additional Standards for Accelerated Death Benefits.  This week's tip concerns the requirement of a terminal illness qualifying event.

You may be familiar with the requirement that a terminal illness qualifying event must be included when any qualifying event other than terminal illness is provided in an accelerated death benefit rider or provision.  This requirement is outlined in the definitions section of the Additional Standards for Accelerated Death Benefits, section C.(2), as follows:

(2) A Terminal Illness qualifying event must always be included. The company may also provide accelerated benefits upon the occurrence of other qualifying events. If the accelerated death benefit provides multiple qualifying events, the insured meeting the conditions of any one specified qualifying event shall be sufficient to entitle the owner to accelerate the death benefit.

This requirement can be, and often is, fulfilled by the use of two separate riders.  For instance, a filer will often have a terminal illness accelerated death benefit rider and a separate chronic illness accelerated death benefit rider.  However, it is very important to note that mix and match cannot be used to achieve compliance with this Uniform Standards requirement. The reason is the terminal illness qualifying event must meet the specific requirements of these Uniform Standards, which the Insurance Compact can only ensure by reviewing it directly. This means that a state approved terminal illness accelerated death benefit rider and an Insurance Compact chronic illness accelerated death benefit rider together will not satisfy the requirement.  The terminal illness qualifying event must be approved by the Insurance Compact.

To help ensure that your accelerated death benefit riders are reviewed promptly and with minimal objections, be sure to refer to the Additional Standards for Accelerated Death Benefits

If you have any questions regarding this provision or the Insurance Compact, please contact the IIPRC office.