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, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
2. (2) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of SDCL 58-15-31;
3. (3) The policy meets the disclosure requirements of §§ 20:06:21:44.01, 20:06:21:47, and 20:06:21:48;
4. (4) Any policy illustration that meets the applicable requirements of chapter 20:06:38; and

5. (5) An actuarial memorandum is filed with the Division of Insurance 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 per policy and dollars per unit of benefits, if any;
   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 per policy and the average issue age;
   7. (g) A statement as to whether underwriting is performed at the time of application. If underwriting is used the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and
   8. (h) A description of the effect of the long-term 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.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-8 .

Law Implemented: SDCL 58-17B-8 .