Ariz. Admin. Code § R20-6-1018 - Suitability
A. This Section
does not apply to life insurance policies that accelerate benefits for
long-term care.
B. Every insurer or
other person marketing long-term care insurance, including an insurance
producer or managing general agent, (the "issuer") 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. Train its insurance producers in the use
of its suitability standards, and
3. Maintain a copy of its suitability
standards and make them available for inspection upon the Director's
request.
C. To determine
whether an applicant meets an issuer's suitability standards, the insurance
producer and issuer shall develop procedures that take the following into
consideration:
1. The applicant's 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, if any, when compared to the
values, benefits, and costs of the recommended purchase or
replacement.
D. The
issuer shall make reasonable efforts to obtain the information set out in
subsection (C), including giving the applicant the "Long-Term Care Insurance
Personal Worksheet" prescribed in Appendix A, to complete before or at the time
of application. The issuer shall use a personal worksheet that contains, at a
minimum, the information contained in Appendix A, in substantially the same
text and format, in not less than 12 point type. The issuer may ask the
applicant to provide additional information to comply with its suitability
standards. An issuer shall file a copy of its personal worksheet with the
Director.
E. An issuer shall not
consider an applicant for coverage until the issuer has received the
applicant's completed personal worksheet, except the personal worksheet need
not be returned for sales of employer group long-term care insurance to
employees and their spouses.
F. No
one shall sell or disseminate information obtained through the personal
worksheet outside the issuer that obtains the worksheet.
G. The issuer shall use its suitability
standards to determine whether issuance of long-term care insurance coverage to
a particular applicant is appropriate.
H. An insurance producer shall use the
suitability standards developed by the issuer in marketing long-term care
insurance.
I. When giving an
applicant a personal worksheet, the issuer shall also provide the applicant
with a disclosure form entitled "Things You Should Know Before You Buy
Long-Term Care Insurance." The form shall be in substantially the same format
and text contained in Appendix H, 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
that is substantially similar to Appendix I. However, if the applicant has
declined to provide financial information, the issuer may use some other method
to verify the applicant's intent to purchase the long-term care policy. The
issuer shall have either the applicant's returned Appendix I letter or a record
of the alternative method of verification as 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 as prescribed in subsection (J).
Notes
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