69O-157.118. Nonforfeiture Benefit Requirement

(1) This rule does not apply to life insurance policies or riders meeting the conditions of subsection 69O-157.113(9), F.A.C., containing accelerated long-term care benefits.

(2)(a) All insurers offering long term care insurance in this state shall offer a nonforfeiture protection provision at the time of issue as required by Section 627.94072, F.S.

(b) If the insurer offers an option other than the shortened benefit period option, the nonforfeiture protection option offered shall be determined such that the benefits provided are determined at time of issue to be actuarially equivalent to those provided by the shortened benefit period option.

(3)(a) If the offer for nonforfeiture benefits required to be made under Section 627.94072, F.S., is rejected, for individual and group policies without nonforfeiture benefits the insurer shall include in the policy, or as a rider or endorsement to the policy, the contingent benefit upon lapse described in this rule.

(b) In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

(c) 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 45 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%

 

 

(d) On or before the effective date of a substantial premium increase as defined in paragraph 69O-157.118(3)(c), F.A.C., the insurer shall:

1. Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

2.a. Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of the shortened benefit period nonforfeiture benefit contained in Section 627.94072, F.S.

b. This option may be elected at any time during the 120 day period referenced in paragraph 69O-157.118(3)(c), F.A.C., and shall be available from the end of the grace period and is not restricted to being available only on or after the third policy anniversary; and

3. Notify the policyholder or certificateholder that a default or lapse at any time during the 120 day period referenced in paragraph 69O-157.118(3)(c), F.A.C., shall be deemed to be the election of the offer to convert in subparagraph 69O-157.118(3)(d)2., F.A.C.

(4) To determine whether contingent nonforfeiture upon lapse provisions are triggered under paragraph 69O-157.118(3)(c), F.A.C., 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.

(5)(a) When the premium payment period is less than the term of eligibility for benefits under the policy, the insurer shall upon lapse provide a contingent benefit that in the event of any rate increase by the insurer:

1. The insurer shall provide for paid-up policy benefits in the event of policyholder termination within 120 days of the due date of the premium so increased if the ratio in subparagraph 2. below is at least 40 percent.

2. The minimum required paid-up benefits, including the amount paid and the maximum amount of benefits payable, shall be at least equal to the ratio of the number of years (and partial years) paid less one divided by the number of years in the premium paying period less one times the policy benefits at the time of policyholder termination.

3. In addition, the insurer shall provide the contingent benefit upon lapse required by subsection 69O-157.118(3), F.A.C.

(b) Notice shall be provided to insureds at the time of a rate increase notifying them of their benefits under this provision of the contract if they terminate coverage.

Specific Authority 624.308(1), 627.9407(1), 627.9408 FS. Law Implemented 624.307(1), 627.410(6), 627.9402, 627.9407, 627.94072 FS. History–New 1-13-03, Formerly 4-157.118.