02- 031 C.M.R. ch. 425, § 23 - Applicant's Suitability for Long-term Care Insurance
A. This section shall 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) Train its producers 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 superintendent.
C.
(1) To
determine whether the applicant meets the standards developed by the issuer,
the producer and issuer shall develop procedures that take the following into
consideration:
(a) The ability to pay for the
proposed coverage and other pertinent financial information related to the
purchase of the coverage;
(b) 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
(c) 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.
(2) The issuer and producer, when one is
involved, shall make reasonable efforts to obtain the information set out in
Section 23(C)(1). The efforts shall include presentation to the applicant, at
or prior to application, of the "Long-term Care Insurance Personal Worksheet."
The personal worksheet used by the issuer shall contain, at a minimum, the
information in the format contained in Appendix B 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 format shall be filed with the superintendent for
informational purposes.
(3) A
completed personal worksheet shall be returned to the issuer prior to 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.
(4) The issuer's or producer's sale or
dissemination outside the company of information obtained through the personal
worksheet is prohibited.
D. The issuer shall use the suitability
standards it has developed pursuant to this section in determining whether
issuing long-term care insurance coverage for an applicant is
appropriate.
E. Producers shall use
the suitability standards developed by the issuer in marketing long-term care
insurance.
F. 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 contained in Appendix
C, in not less than 12 point type.
G. 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
suitability letter similar to Appendix D. 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
return letter or a record of the alternative method of verification shall be
made part of the applicant's file.
Notes
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