Florida Senate - 2012                                    SB 1756
       By Senator Negron
       28-00835B-12                                          20121756__
    1                        A bill to be entitled                      
    2         An act relating to life insurance; requiring certain
    3         life insurance policies or life insurance policy
    4         riders to provide for accelerated payment of death
    5         benefits to insureds who have been residents of a
    6         nursing home for a specified amount of time and who
    7         are expected to remain residents of a nursing home
    8         until their death; requiring insurers providing life
    9         insurance to offer applicants for life insurance
   10         certain policies or riders providing for accelerated
   11         death benefit payments; requiring that insurers offer
   12         by a specified date riders providing certain
   13         accelerated death benefit payments to every insured
   14         holding a life insurance policy in effect before the
   15         effective date of this act; requiring that an insured
   16         who holds a life insurance policy and who applies for
   17         Medicaid benefits in order to pay for long-term care
   18         determine the fair market value of the policy and
   19         spend down all proceeds from converting the policy to
   20         pay for long-term care in a specified manner;
   21         requiring a long-term care benefit plan to ensure that
   22         certain payments are to be made to an insured’s estate
   23         and guarantee payment of a specified funeral expense
   24         benefit to an insured’s estate; providing an
   25         exception; requiring insurers to provide written
   26         notifications under certain circumstances containing
   27         specified information and statements to life insurance
   28         policy owners who are of a certain age or terminally
   29         or chronically ill; providing penalties and remedies
   30         under part II of ch. 501, F.S., relating to deceptive
   31         and unfair trade practices, for an insurer’s failure
   32         to comply with such notice requirements; requiring the
   33         Office of Insurance Regulation to adopt rules;
   34         providing an effective date.
   36  Be It Enacted by the Legislature of the State of Florida:
   38         Section 1. Life insurance accelerated benefit policy or
   39  rider.—
   40         (1) Any insured who holds a life insurance policy or life
   41  insurance policy rider that provides accelerated payments of a
   42  death benefit upon diagnosis of a terminal illness defined as a
   43  life expectancy of 12 months or less is entitled to an
   44  accelerated payment of a death benefit if it is shown that the
   45  insured has been a resident of a nursing home for at least 3
   46  months and is expected to remain a resident of a nursing home
   47  until his or her death. The amount of the benefit to which the
   48  insured is entitled must be determined in an actuarially
   49  appropriate manner by considering the length the policy has been
   50  in effect, the amount that has been paid on the policy, the cash
   51  value of the policy, and the amount of the death benefit.
   52         (2) Every insurer providing life insurance in this state
   53  must offer an applicant for life insurance a policy or rider
   54  entitling the insured to accelerated payment of a death benefit
   55  upon diagnosis of a terminal illness or upon a showing that the
   56  insured has been a resident of a nursing home and is expected to
   57  remain a resident of a nursing home until his or her death, as
   58  provided under subsection (1).
   59         (3) On or before July 1, 2013, every insurer must offer a
   60  rider that provides the accelerated payment of a death benefit
   61  as provided under subsection (1) to every insured holding a life
   62  insurance policy in effect before the effective date of this
   63  act.
   64         (4) Any insured who holds a life insurance policy must
   65  determine the fair market value of the policy, as provided under
   66  this section, if he or she applies for Medicaid benefits to pay
   67  for long-term care, and must first spend down all proceeds from
   68  converting the policy to which he or she is entitled,
   69  exclusively in payment for long-term care services under the
   70  direction of an irrevocable long-term care benefit account
   71  administered by a qualified third party. After completion of the
   72  spend down of the long-term care benefit through use of an
   73  irrevocable long-term care benefit account, the Medicaid
   74  applicant may be considered for Medicaid eligibility.
   75         (5) A long-term care benefit plan must:
   76         (a) Ensure that if the insured dies before the long-term
   77  care benefit account has been spent down, any remaining unused
   78  balance of monthly benefit payments is to be paid to the estate
   79  of the insured; and
   80         (b) Guarantee that upon proof of the insured’s death, a
   81  final funeral expense benefit of $5,000 or 5 percent of the
   82  policy’s face value, whichever is less, is to be paid to the
   83  estate of the insured.
   85  A qualified funeral expense policy is exempt from the
   86  requirements of this subsection.
   87         Section 2. Lapse or surrender of life insurance policy;
   88  notice to policy owners age 65 or older or terminally or
   89  chronically ill.—
   90         (1) An insurer must provide the written notice required by
   91  subsection (2) to a life insurance policy owner if an insured is
   92  age 65 or older, or known by the insurer to be terminally or
   93  chronically ill, and if:
   94         (a) The policy owner requests the surrender, in whole or in
   95  part, of a policy;
   96         (b) The policy owner requests an accelerated death benefit
   97  under a policy;
   98         (c) The insurer sends notice to the policy owner that the
   99  policy may lapse; however, an insurer does not have to provide
  100  the notice required under this subsection to a policy owner more
  101  than once within a 12-month period after the date of the first
  102  notice that the policy may lapse; or
  103         (d) At any other time that the Commissioner of Insurance
  104  Regulation may prescribe by rule.
  106  The failure of an insurer to comply with the requirements of
  107  this subsection is a deceptive and unfair trade practice as
  108  defined in part II of chapter 501, Florida Statutes, and is
  109  subject to the penalties and remedies provided therein.
  110         (2) The Office of Insurance Regulation, under the direction
  111  of the Commissioner of Insurance Regulation, must adopt rules
  112  that provide for a written notice that apprises a policy owner
  113  in lay terms of the alternatives available to prevent the lapse
  114  or surrender of a policy and a policy owner’s rights relating to
  115  the disposition of a policy. The Office of Insurance Regulation
  116  shall bear any and all costs associated with the development and
  117  adoption of rules under this subsection.
  118         (3) The written notice must contain the following:
  119         (a) A statement explaining that life insurance is a
  120  critical part of a broader financial plan;
  121         (b) A statement explaining that there are alternatives to
  122  the lapse or surrender of a policy;
  123         (c) A general description of the following alternatives to
  124  the lapse or surrender of a policy:
  125         1. Accelerated death benefits available under the policy or
  126  as a rider to the policy;
  127         2. The sale of the policy pursuant to a life settlement
  128  contract, including that a life settlement is a regulated
  129  transaction in this state;
  130         3. The replacement of the policy pursuant to statute, rule,
  131  or the terms of the policy;
  132         4. The maintenance of the policy pursuant to the terms of
  133  the policy, pursuant to a rider to the policy, or through a life
  134  settlement contract;
  135         5. The maintenance of the policy through the use of loans
  136  issued by an insurer or a third party, using the cash surrender
  137  value of the policy as collateral to obtain the loans;
  138         6. Conversion of the policy from a term policy to a
  139  permanent policy; and
  140         7. Conversion of the policy in order to obtain long-term
  141  care health insurance coverage or a long-term care benefit plan;
  142  and
  143         (d) A statement explaining that life insurance, life
  144  settlements, or other alternatives to the lapse or surrender of
  145  the policy described in the notice may or may not be available
  146  to a particular policy owner depending on a number of
  147  circumstances, including, but not limited to, the age and health
  148  status of the insured or the terms of a life insurance policy,
  149  and that a policy owner should contact his or her financial
  150  advisor, insurance agent, broker, or attorney to obtain further
  151  advice and assistance.
  152         Section 3. This act shall take effect July 1, 2012.