28 Tex. Admin. Code § 3.3842 - Appropriateness of Recommended Purchase
(a) In
recommending the purchase or replacement of any long-term care insurance policy
or certificate, the company and the agent must make reasonable efforts to
determine the appropriateness of the recommended purchase or
replacement.
(b) Each insurer,
health care service plan, or other entity marketing long-term care insurance
(issuer) must :
(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 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
commissioner.
(c) To
determine whether the applicant meets the standards developed by the issuer,
the agent and issuer must develop procedures that take the following factors
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 and, where an agent is involved, the agent, must make reasonable efforts
to obtain the information set forth in subsection (c) of this section. The
efforts must include presentation to the applicant, at or prior to application,
the Form Number LHL560(LTC) Long-Term Care Insurance Personal Worksheet as
specified in Figure: 28 TAC §
3.3829(b)(8)(H).
The issuer may request the applicant to provide additional information to
comply with the issuer's suitability standards. The following requirements
apply if the issuer requests such additional information on the personal
worksheet:
(1) A copy of the issuer's
Long-Term Care Insurance Personal Worksheet Form Number LHL560(LTC) that
includes the additional information that is requested to comply with the
issuer's suitability standards must be filed with the department for approval
prior to use.
(2) Any form filed
pursuant to paragraph (1) of this subsection must be filed no later than 60
days prior to use and is subject to the requirements and procedures set forth
in Subchapter A of this chapter (relating to Submission Requirements for
Filings and Departmental Actions Related to Such Filings).
(3) The filing should be submitted to the
Texas Department of Insurance, Life and Health Division, Filings Intake,
MC-LH-LHL, P.O. Box 12030, Austin, Texas 78711-2030.
(e) The issuer must receive the completed
personal worksheet from the applicant prior to the issuer's consideration of
the applicant for coverage, except the completed personal worksheet does not
need to be received by the issuer prior to the issuer's consideration of an
applicant for coverage for employer group long-term care insurance for
employees and their spouses.
(f)
The sale or dissemination outside of the company or agency by the issuer or
agent of information obtained through the completion of Form Number LHL560(LTC)
Long-Term Care Insurance Personal Worksheet, including any additional
information provided to comply with the issuer's suitability standards, is
prohibited.
(g) The issuer must use
the suitability standards that it has developed pursuant to this section in
determining whether issuing long-term care insurance coverage to an applicant
is appropriate.
(h) Agents must use
the suitability standards developed by the issuer in marketing the issuer's
long-term care insurance.
(i) At
the same time that the personal worksheet is provided to the applicant, Form
Number LHL567(LTC) Things You Should Know Before You Buy Long-Term Care
Insurance, containing the text specified in Figure: 28 TAC §
3.3842(i)(7)
must also be provided to the applicant. The following requirements and
procedures apply to this form:
(1) The text
must be in at least 12-point type and must follow the order of the information
presented in Figure: 28 TAC §
3.3842(i)(7).
(2) The text as specified in Figure: 28 TAC §
3.3842(i)(7) is
mandated; the format for the form is a recommended format. An insurer may
format the mandated text in a different format from that specified in Figure:
28 TAC §
3.3842(i)(7) if
the insurer files the form for review and approval by the
commissioner.
(3) The form must be
filed no later than 60 days prior to use and is subject to the requirements and
procedures set forth in Subchapter A of this chapter.
(4) An insurer may add a company name and
identifying form number to Form Number LHL567(LTC) as specified in Figure: 28
TAC §
3.3842(i)(7)
without obtaining commissioner approval.
(5) The Instructions to Company that are
included in Figure: 28 TAC §
3.3842(i)(7) are
to aid the insurer in drafting the form and should not be included in the text
of the form used by the insurer.
(6)
If filing the form for review and approval as provided under paragraphs (2) and
(3) of this subsection, the insurer must file the form with the Texas
Department of Insurance, Life and Health Division, Filings Intake, MC-LH-LHL,
P.O. Box 12030, Austin, Texas 78711-2030.
(7) A representation of Form Number
LHL567(LTC) Things You Should Know Before You Buy Long-Term Care Insurance is
as follows:
(j) If the issuer determines that the
applicant does not meet its financial suitability standards, or if the
applicant has declined to provide all of the requested information, the issuer
may reject the application or the issuer must send the applicant a letter in
accordance with or similar to Form Number LHL568(LTC) Long-Term Care Insurance
Suitability Letter. However, only in the event that the applicant has declined
to provide the requested financial information, the issuer may use some other
method to verify the applicant's intent. This method, at the option of the
issuer, may include phone call, fax, U.S. mail, email or any combination of
these methods. Either the applicant's returned Suitability Letter containing
the applicant's response or a record of the alternative method of verification
must be made a part of the applicant's file. If the issuer elects to send the
applicant a Suitability Letter to comply with the requirements of this
subsection, the following specifies the Suitability Letter and the requirements
and procedures that apply:
(1) The issuer's
Suitability Letter must use the text in Form Number LHL568(LTC) as specified in
Figure: 28 TAC §
3.3842(j) orbe
similar to the text specified in Figure: 28 TAC §
3.3842(j).
(2) The text must be in at least 12-point
type.
(3) The Instructions to
Company that are included in Figure: 28 TAC §
3.3842(j) are to
aid the issuer in drafting the form and should not be included in the text of
the letter sent to the applicant.
(4) The form number should not be included on
the letter sent to the applicant.
(k) This section and the delivery
requirements for the shopper's guide in §
3.3840 of this title (relating to
Requirements To Deliver Shopper's Guide) apply to riders for group and
individual annuities and life insurance policies that provide long-term care
insurance.
(l) This section and the
delivery requirements for the shopper's guide in §
3.3840 of this title do not apply
to life insurance policies:
(1) that
accelerate the death benefit for one or more of the qualifying events of
terminal illness, medical conditions requiring extraordinary medical
intervention or permanent institutional confinement; and
(2) that provide the option of a lump-sum
payment for those benefits; and
(3)
where neither the benefits nor the eligibility for the benefits is conditioned
upon the receipt of long-term care.
Notes
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