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September 09, 2001 at 08:00 PM
Disclosure Remains Focus Of Small Face Amount Issue
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The breadth of disclosure covered by the Disclosure for Small Face Amount Life Insurance Policies Model Act is one issue that will be discussed during the fall meeting of the National Association of Insurance Commissioners later this month.
A policy with $15,000 or less in face amount is considered a small face amount policy. Under the current draft, a statement making a policyholder aware that premiums had exceeded face amount would be required.
This issue, along with whether insurers are looking for multiple beneficiaries when an insured dies, is being examined by regulators. Their examination started with a separate investigation of how insurers charged policyholders different premiums based on race.
Disclosure remains the focus of the draft model, according to Leslie Jones, a life actuary with the South Carolina department of insurance.
But issues that will be discussed as the model moves toward a possible December adoption include further discussion on exemptions for group products, she says.
The current draft would exempt variable life insurance, individual and group annuity contracts, credit life insurance and group or individual policies issued to members of an employer group where the employer chose coverage, a portion of the premium is paid by the group or through payroll deduction or group underwriting or simplified underwriting.
Jones says the disclosure document developed for small face amount policies may also be used for home service products.
