Weekly Tip: Amendments to Standards for Accelerated Death Benefits


Weekly Tips

Amendments to Standards for Accelerated Death Benefits


The Additional Standards for Accelerated Death Benefits for Individual Life Insurance Policies which were recently amended as part of the 5-Year Review become effective for filing use on December 4th.  In this week’s Weekly Tip we will provide you with some highlights regarding the substantive changes and clarification amendments included in the revised Uniform Standard.  The amendments are applicable to new forms only and it is not necessary to re-file previously approved forms to comply with the amendments. 

The first substantive change made to the Uniform Standards may be found in a new provision added to §3C Notice of Effect of Benefit Payment on Other Benefit Provisions.  Where required by state law, filers must provide a standardized statement to the applicant at the time of application for a form containing accelerated death benefits that describes such elements as the accelerated death benefit, qualifying events, premium costs, expenses, and tax treatments.  The purpose in adopting this revision was to simplify compliance with state notice requirements and avoid state-specific requirements and filings of disclosures intended for use with IIPRC-approved forms. The content of the written statement shall comply with the uniform standards for accelerated death benefits and not state-specific requirements.  The list of states that require this written statement will be made available by the Insurance Compact on the Insurance Company Resources page of the Insurance Compact website.  The written statement may be submitted in the filing on the Supporting Documents tab for approval.

The second substantive change pertains to the Benefit Design Options found in §3 B(9).  The amended provision eliminated the mandate that the company calculate the accelerated death benefit with options to reduce the payment by an amount to pay remaining premiums or to continue to pay premiums to keep the policy in force. 

Additional amendments were made to provide clarification to several other provisions of the Uniform Standard.  Clarifications in the definition of “chronic illness” and related provisions were made to recognize and incorporate Internal Revenue Code requirements regarding elimination periods, per-diem limits and certifications when providing tax-qualified accelerated death benefits.  The clarification amendments were based on recommendations from the Insurance Compact Office as well as the Industry Advisory Committee.  For more information on these clarifications, please refer to the Transmittal Memo for Amendments to Standards for Accelerated Death Benefits found on the Record.

If you have any questions regarding the Uniform Standards or the amendments made to the Uniform Standards, please contact the Insurance Compact Office.