2629 RESERVE STANDARDS

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2629.1 If long-term care benefits are provided through the acceleration of benefits under group or individual life insurance policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with section 1 of chapter V of the Life Insurance Act, approved June 19, 1934 (48 Stat. 1156; D.C. Official Code § 31-4701 (2001)). Claim reserves shall also be established when the policy or rider is in claim status.

2629.2 Reserves for policies and riders subject to subsection 2629.1 shall be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations shall be acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The

calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

2629.3 In the development and calculation of reserves for policies and riders subject to subsection 2629.1, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including the following:

1. (a) Definition of insured events;
2. (b) Covered long-term care facilities;
3. (c) Existence of home convalescence care coverage;
4. (d) Definition of facilities;
5. (e) Existence or absence of barriers to eligibility;
6. (f) Premium waiver provision;
7. (g) Renewability;
8. (h) Ability to raise premiums;
9. (i) Marketing method;
10. (j) Underwriting procedures;
11. (k) Claims adjustment procedures;
12. (l) Waiting period;
13. (m) Maximum benefit;
14. (n) Availability of eligible facilities;
15. (o) Margins in claim costs;
16. (p) Optional nature of benefit;
17. (q) Delay in eligibility for benefit;

(r) Inflation protection provisions; and

(s) Guaranteed insurability option.

2629.4 Any applicable valuation morbidity table used in the calculation of reserves for polices or riders subject to subsection 2629.1 shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

2629.5 If long-term care benefits are provided other than as in subsection 2629.1, reserves shall be determined in accordance with the requirements and standards for determining health insurance reserves.

SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008).