054.00.13-28. Nonforfeiture Benefit Requirement.
AR ADC 054.00.13-28Arkansas Administrative Code
Ark. Admin. Code 054.00.13-28
054.00.13-28. Nonforfeiture Benefit Requirement.
(1) A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in Subsection E; and
C. If the offer required to be made under Ark. Code Ann. § 23-97-319 is rejected, the insurer shall provide the contingent benefit upon lapse described in this Section. Even if this offer is accepted for a policy with a fixed or limited premium payment period, the contingent benefit on lapse in Subsection D(4) of this Rule shall still apply.
(3) The contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.
Triggers for a Substantial Premium Increase | |
---|---|
Issue Age | Percent Increase Over Initial Premium |
29 and under | 200% |
30-34 | 190% |
35-39 | 170% |
40-44 | 150% |
45-49 | 130% |
50-54 | 110% |
55-59 | 90% |
60 | 70% |
61 | 66% |
62 | 62% |
63 | 58% |
64 | 54% |
65 | 50% |
66 | 48% |
67 | 46% |
68 | 44% |
69 | 42% |
70 | 40% |
71 | 38% |
72 | 36% |
73 | 34% |
74 | 32% |
75 | 30% |
76 | 28% |
77 | 26% |
78 | 24% |
79 | 22% |
80 | 20% |
81 | 19% |
82 | 18% |
83 | 17% |
84 | 16% |
85 | 15% |
86 | 14% |
87 | 13% |
88 | 12% |
89 | 11% |
90 and over | 10% |
(4) A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in Paragraph (6)(b) is forty percent (40%) or more. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.
Triggers for a Substantial Premium Increase | |
---|---|
Issue Age | Percent Increase Over Initial Premium |
Under 65 | 50% |
65-80 | 30% |
Over 80 | 10% |
This provision shall be in addition to the contingent benefit provided by Paragraph (3) above and where both are triggered, the benefit provided shall be at the option of the insured.
(b) Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent (90%) of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in Subsection D(4); and
(2) For purposes of this Subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in Paragraph (3).
(3) The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of Subsection F.
J. To determine whether contingent nonforfeiture upon lapse provisions are triggered under Subsection D(3) or D(4), a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.
(2) The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying contracts approved by the Commissioner for the same contract form; and
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 054.00.13-28, AR ADC 054.00.13-28
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