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September 06, 2005 at 08:00 PM
The New York State Insurance Department wants to update its accelerated death benefit regulations.[@@]
The proposed update would affect any individual life, group life or fraternal life insurer doing business in the Empire State that offers early benefits payments for insureds who suffer from serious health problems.
Much of the proposed update deals with accelerated death benefit provisions that pay off when insureds need long term care.
The proposed changes will help make consumers aware that they are getting limited access to life insurance policy benefits to help pay for long term care, not full-fledged LTC insurance, and they will ensure that the benefits payments qualify for favorable federal income tax treatment, state officials write in a regulatory impact statement discussing the draft.
The New York department “had extensive discussions with the Life Insurance Council of New York, a trade organization representing life insurance companies doing business in New York, during the drafting of the regulation,” officials write. “The regulation is reflective of the input received and the various alternatives considered during those discussions.”
The New York department considered simply adopting the 1993 National Association of Insurance Commissioners Long Term Care Insurance Model Act and Regulation standards for LTC-related accelerated death benefits. But the model was developed to regulate stand-alone long term care insurance policies, and the New York department has decided to try to develop standards that are suitable for life insurance policies that offer some benefits for long term care, officials write.
