3 AAC 28.577 - Suitability

(a) This section does not apply to life insurance policies that accelerate benefits for long-term care.

(b) Every insurer, health care service plan, or other entity marketing long-term care insurance shall

(1) develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

(2) tram its agents in the use of its suitability standards; and

(3) maintain a copy of its suitability standards and make them available for Inspection upon request by the director.

(c) To determine whether the applicant meets the standards developed by the issuer, the agent and issuer shall develop procedures that take the following into consideration;

(1) the ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

(2) the applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

(3) the values, benefits, and costs of the applicant's existing insurance, when compared to the values, benefits, and costs of the recommended purchase or replacement.

(d) The issuer, and where an agent is involved, the agent, shall make reasonable efforts to get the information set out in (c) of this section. The efforts shall include presentation to the applicant, at or before application, of the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the issuer must contain, at a minimum, the information in the format as prescribed by the director, in not less than 12-point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer's personal worksheet shall be filed with the director.

(e) A completed personal worksheet shall be returned to the issuer before the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses.

(f) The sale or dissemination outside the company or agency by the issuer or agent of information gotten through the personal worksheet is prohibited.

(g) The issuer shall use the suitability standards it has developed under this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate.

(h) An agent shall use the suitability standards developed by the issuer in marketing long-term care insurance.

(i) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format as prescribed by the director, in not less than 12-point type.

(j) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to the format prescribed by the director. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.

(k) The issuer shall report annually to the director the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

Notes

3 AAC 28.577

Eff. 3/27/2022, Register 241, April 2022

Authority:AS 21.06.090

AS 21.53.066

AS 21.53.090