31 Pa. Code § 87.12 - Limited benefit life policies

(a) The Insurance Commissioner has disapproved any further issue of limited benefit life policies. Limited benefit life policies are those plans which provide only the following or similar coverages during certain specified periods.

(1) For natural death during a specified period, a return of premiums plus interest.

(2) For accidental death during the specified period, the face amount of the policy.

(3) For death from any cause after the specified period, the face amount of the policy.

(b) This type of policy purports to offer life insurance coverage when it does not do so during the initial period, lends itself to misrepresentation, has the capacity and tendency to mislead the purchaser, fails to provide the coverage, benefits and provisions required by law and, therefore, is contrary to the public interest.

(c) A life insurance policy where the benefits payable are not at least as great as the following shall be considered a limited benefit life policy, and thereby prohibited by subsection (a):

(1) The death benefit is level in the fourth and subsequent years; the amount of this death benefit is known as ultimate amount.

(2) The death benefit in the first year is more than 120% of the total gross premiums due and payable through the first year is at least:

(i) Five percent of the ultimate amount for issue ages over 55.

(ii) Ten percent of the ultimate amount for issue ages 46-55.

(iii) Fifteen percent of the ultimate amount for issue ages 36-45.

(iv) Thirty percent of the ultimate amount for issue ages under 36.

(3) The death benefit on the second year is more than 130% of the total gross premiums due and payable through the second year and is at least:

(i) Fifteen percent of the ultimate amount for issue ages over 55.

(ii) Thirty percent of the ultimate amount for issue ages 46-55.

(iii) Forty percent of the ultimate amount for issue ages 36-45.

(iv) Sixty percent of the ultimate amount for issue ages under 36.

(4) The death benefit in the third policy year is more than 150% of the total gross premiums due and payable through the third year and is at least:

(i) Forty percent of the ultimate amount for issue ages over 55.

(ii) Sixty percent of the ultimate amount for issue ages 46-55.

(iii) Eighty percent of the ultimate amount for issue ages 36-45.

(iv) One hundred percent of the ultimate amount for issue ages under 36.

(d) Policies such as conventional jumping juvenile policies, increasing or decreasing term policies, increasing whole life policies issued or marketed in conjunction with term insurance policies, policies in which the death benefit is graded because the insured as a result of individual underwriting has been determined to be uninsurable on a standard basis, policies made available through employers to provide benefits for employes, and postretirement life policies are not considered limited benefit life insurance policies; and issuance thereof is permitted.

Notes

31 Pa. Code § 87.12

The provisions of this § 87.12 adopted March 17, 1972, 2 Pa.B. 457, amended through July 13, 1979, effective 7/14/1979, 9 Pa.B. 2337.

This section cited in 31 Pa. Code § 90c.16 (relating to death benefit dollar amounts).