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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

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Presentation Transcript
slide3

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
slide4

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

  • Presentation Overview
  • Long Term Care (LTC) Products
  • Annuity Nonforfeiture Calculations
  • Medicare Supplement Products
slide5

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

  • Long Term Care
  • LTC Partnership Program
  • LHL570(LTC)
  • Insurer Certification Form
  • (28 TAC § 3.3873(a)(2))
slide6

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate- Must be Tax Qualified
  • (28 TAC §3.3871(a)(1)(B), 28 TAC §3.3847)
slide7

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate (continued)
  • Inflation Protection Requirements
  • (28 TAC §3.3871(a)(1)(C), 28 TAC § 3.3872)
slide8

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate (continued)
  • Inflation Protection Requirements
  • Person < 61 years of age =

Compound

slide9

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate (continued)
  • Inflation Protection Requirements
  • Person >61, but <76 years of age =

Simple

or

Compound

slide10

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate (continued)
  • Inflation Protection Requirements
  • = or >76 years of age =

Not Required,

But Must be Offered

slide11

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

Great Job!

100 % Correct

slide12

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

  • Long Term Care
  • LTC Partnership Program
  • Policy or Certificate (continued)
  • LHL569(LTC)
  • Required Disclosure Notice
  • (28 TAC §3.3871(a)(2))
slide13

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

          • 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))
slide14

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

          • 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”
slide15

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

  • 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)
slide16

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

  • 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.
slide17

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

  • 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
slide18

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

  • Long Term Care
  • Life Policy/Annuity Contracts
  • An accelerated-of-life insurance benefit is a benefit under a life insurance contract which prepays all or a portion of the death benefit. This type of a rider is not considered LTC if:
  • It accelerates the death benefit for:
    •  terminal illness, medical conditions requiring extraordinary medical intervention
    •  permanent institutional confinement,
    •  specified diseases (examples: cancer, heart disease, AIDS, Organ Transplants)
slide19

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

  • 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
slide20

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

  • 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
slide21

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

          • 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.
slide22

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

          • 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
slide23

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

          • Annuity Nonforfeiture Calculations
  • 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.
slide24

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

        • Annuity Nonforfeiture Calculations
        • 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
slide27

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

  • Annuity Nonforfeiture Calculations
  • 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
slide28

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

  • What’ Supp? Medicare Supplement
  • 2010 Standardized Plans (28 TAC § 3.3322)
slide29

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

  • What’s Supp? Medicare Supplement
  • 2010 Standardized Plans (28 TAC § 3.3322)
  • Outline of Coverage(LHL 050 Rev. 06/09)(28TAC § 3.3308(c))
slide30

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

  • What’s Supp? Medicare Supplement
  • 2010 Standardized Plans (28 TAC § 3.3322)
  • Outline of Coverage(28TAC § 3.3308(c))
  • 1990 Standardized Plans (Discontinued)
slide31

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

  • What’s Supp? Medicare Supplement
  • 2010 Standardized Plans (28 TAC § 3.3322)
  • Outline of Coverage(28 TAC § 3.3308(c))
  • 1990 Standardized Plans (Discontinued)
  • Rates/Actuarial Memorandum
slide32

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

  • 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
slide33

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

  • Conclusion & Questions
  • Contact Information:
  • Aaron Jenkins (Insurance Specialist)
  • aaron.jenkins@tdi.state.tx.us
  • Carol Lo (Actuary)
  • carol.lo@tdi.state.tx.us
  • Sean Fry (Assistant Director)
  • sean.fry@tdi.state.tx.us