1. (a) This section applies to all long-term care insurance policies or certificates except those covered under 3 AAC 28.557 and 3 AAC 28.570.

2. (b) Benefits under long-term care insurance policies shall be considered reasonable in relation to premiums if the expected loss ratio is at least 60 percent, calculated in a manner that provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ration, consideration shall be given to all relevant factors, including

   1. (1) statistical credibility of incurred claims experience and earned premiums;
   2. (2) the period for which rates are computed to provide coverage;
   3. (3) experienced and projected trends;
   4. (4) concentration of experience within early policy duration;
   5. (5) expected claim fluctuation;
   6. (6) experience refunds, adjustments, or dividends;
   7. (7) renewability features;
   8. (8) all appropriate expense factors;
   9. (9) interest;
   10. (10) experimental nature of the coverage;
   11. (11) policy reserves;
   12. (12) mix of business by risk classification; and
   13. (13) product features including long elimination periods, high deductibles, and high maximum limits.

3. (c) Subsection (b) of this section does not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

   1. (1) the interest credited internally to determine cash value accumulations, including long-term care, is guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set out in the policy;
   2. (2) the portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of AS 21.45.300;
   3. (3) the policy meets the disclosure requirements of AS 21.53.060;
   4. (4) the policy illustration meets the applicable requirements of 3 AAC 28.800 - 3 AAC 28.849; and

   5. (5) an actuarial memorandum is filed with the division that includes

      1. (A) a description of the basis on which the long-term care rates were determined;
      2. (B) a description of the basis for the reserves;
      3. (C) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;
      4. (D) a description and a table of each actuarial assumption used; for expenses, an insurer must include percent of premium dollars for each policy and dollars for each unit of benefits;
      5. (E) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;
      6. (F) the estimated average annual premium for each policy and the average issue age;
      7. (G) a statement as to whether underwriting is performed at the time of application; the statement must indicate whether underwriting is used and, if used, the statement must include a description of the type or types of underwriting used, like medical underwriting or functional assessment underwriting; with regard to a group policy, the statement must indicate whether the enrollee or a dependent will be underwritten and when underwriting occurs; and
      8. (H) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

(Eff. 3/27/2022, Register 241)

Authority: AS 21.06.090, AS 21.45.300, AS 21.53.060, AS 21.53.090