form and rate issues for accident & health and life, annuity and credit products

Form and Rate Issues for Accident & Health and Life, Annuity and Credit Products


Presenters

• Sean Fry, Assistant Director-Accident/Health Section

• Aaron Jenkins, Insurance Specialist-Life, Annuity and Credit Section

• Carol Lo, Actuary, Actuarial Section


Presentation Overview

• Long Term Care (LTC) Products

• Annuity Nonforfeiture Calculations

• Medicare Supplement Products


Long Term Care

• LTC Partnership Program

LHL570(LTC)

Insurer Certification Form

(28 TAC § 3.3873(a)(2))


Long Term Care


Policy or Certificate- Must be Tax Qualified

(28 TAC §3.3871(a)(1)(B), 28 TAC §3.3847)


Long Term Care


Policy or Certificate (continued)

Inflation Protection Requirements

(28 TAC §3.3871(a)(1)(C), 28 TAC § 3.3872)


Long Term Care




Person < 61 years of age = Compound


Long Term Care




Person >61, but <76 years of age =

Simple or

Compound


Long Term Care




= or >76 years of age = Not Required,But Must be

Offered


Great Job!100 % Correct


Long Term Care



LHL569(LTC)

Required Disclosure Notice

(28 TAC §3.3871(a)(2))


Long Term Care

• LTC Forms (Mandated Text):

(28 TAC §§ 3.3829(b)(8)(9), 3.3842(i)(2))

LTC Personal Worksheet (LHL560(LTC))

LTC Potential Rate Increase Disclosure Form (LHL561(LTC)) Things You Should Know Before You Buy LTC Insurance (LHL567(LTC))


Long Term Care

• LTC Forms (Mandated Text): Exception

(28 TAC §§ 3.3829(b)(8)(9), 3.3842(i)(2))

Exception for the LTC Personal Worksheet

Text: “For State of Texas” “Company”

“Noncancellable/Guaranteed Renewable” “Agent”


Long Term Care

• LTC Web Based Electronic Reporting

Reported each year by June 30

• Link: http://www.tdi.state.tx.us/forms/form10.html

Replacement & Lapse Report: LHL562(LTC)

Rescission Reporting: LHL563(LTC)

Claims Denial Reporting: LHL564(LTC)

Long Term Care Policies Sold: LHL565(LTC)

Suitability Reporting: LHL566(LTC)


Long Term Care

• Life Policy/Annuity Contracts

A Long-Term Care (LTC) rider is subject to 28 TAC Subchapter Y, Chapter 3. These situations make a rider LTC:

• If payments under the rider are to be used specifically for or restricted to LTC expenses.

• If the rider extends the benefits beyond exhaustion of the contract’s death benefit (extension of benefits)

• If the cash value of a policy or contract increases as the result of LTC or LTC related expenses.


Long Term Care

Life Policy/Annuity Contracts-Common Omissions

Outline of Coverage not Included

Improper Order or Format of the Outline of Coverage

Exact language of Subchapter Y is not used (extra/deleted language) in the Rider or Outline of Coverage

Rates/(Cost-of-Insurance)/Actuarial requirements not included


Long Term Care

• Life Policy/Annuity Contracts (continued)

This type of a rider is not considered LTC if:

• It pays a lump sum for benefits

• The payments are not restricted to or conditioned upon the receipt of LTC or LTC related expenses


Long Term Care

Rating Issues:

Section 1651.053, TIC; 28 TAC 3.3831• Missing actuarial certification• Missing moderately adverse experience assumption• Missing accumulation of at least twelve months actual

experience after implementation of prior rate increase• Combining experiences of pre-rate stabilized and rate

stabilized forms• Proposing a series of rate increases


Annuity Nonforfeiture Calculations

• House Bill 1919 passed during the 81st Texas legislative session.

• Amends Section 1107.006, Texas Insurance Code.

• Requires all optional and fixed maturity date annuities to adhere to the 70/10 standard.

• The standard is applicable for purposes of the annuity nonforfeiture calculations.



• The 70/10 Standard:– The maturity date of a contract must not be later than the next

anniversary of the annuity contract that follows the annuitant’s 70th birthday or

– The 10th anniversary of the contract

• Effective Date is June 1, 2010

• Before passage of House Bill 1919, Fixed maturity date annuity contracts did not have to comply with the 70/10 standard



• Optional maturity date contracts already have to comply with the 70/10 standard.

• All annuity contracts issued on or after June 1, 2010, must comply with the 70/10 standard.

• Contracts to be issued on or after June 1, 2010, that are not in compliance must be revised.



Sections 1107.006, 1107.057, 1107.101 – 1107.103 TIC

•Retrospective Test (accumulation value)

•Prospective Test (present value)

Maturity Date = later of:

• next anniversary after 70th birthday; or• 10th anniversary of the contract

Prior to 70/10



• Revise Surrender Charge Schedule

• Revise Issue Age Limit

Revised contract or revised contract page (as an insert page) with new form number

Revised specification page with new form number

Revised actuarial memorandum

Revised nonforfeiture demonstration


What’ Supp? Medicare Supplement

• 2010 Standardized Plans (28 TAC § 3.3322)


What’s Supp? Medicare Supplement


• Outline of Coverage(LHL 050 Rev. 06/09)(28TAC § 3.3308(c))




• Outline of Coverage(28TAC § 3.3308(c))

• 1990 Standardized Plans (Discontinued)




• Outline of Coverage(28 TAC § 3.3308(c))

• 1990 Standardized Plans (Discontinued)

• Rates/Actuarial Memorandum


Medicare Supplement

Rating Issues:

• Effective date of rate increase; 28 TAC § 3.3323

• Rate increase on non-credible blocks; 28 TAC § 3.3307(d)

• Rate increase request on plan A disabled

• Experience must be presented separately by plan


Conclusion & Questions

Contact Information:

Aaron Jenkins (Insurance Specialist)

[email protected]

Carol Lo (Actuary)

[email protected]

Sean Fry (Assistant Director)

[email protected]

mailto:[email protected]



form and rate issues for accident & health and life, annuity and credit products

Documents

rate issues

accident health

care ltc rider

rider ltc

ltc expenses

result of ltc

receipt of ltc

ltc insurance lhl567ltc