Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 4 - LIFE AND ANNUITY › Subchapter K - STANDARDS FOR ACCELERATION-OF-LIFE-INSURANCE BENEFITS FOR INDIVIDUAL AND GROUP POLICIES AND RIDERS › Section 4.1115 - Requirements for Benefits Represented to Be Qualified for Favorable Federal Tax Treatment

Current through Reg. 49, No. 28; July 12, 2024
(a) On or after the
				  effective date of this subchapter, no life insurance contract providing for
				  acceleration-of-life-insurance benefits may be represented to be tax-qualified
				  under federal law governing taxation of such benefits unless such benefits meet
				  the requirements set forth in subsections (b) - (d) of this section.
(b) Acceleration-of-life-insurance benefits
				  described as tax-qualified must be limited to insureds who have a "qualified
				  terminal illness" or a "qualified long-term care illness," as those terms are
				  defined (and terms used within the definitions are defined) in paragraphs (1) -
				  (3) of this subsection.
(1) An insured has a
				  "qualified terminal illness" if a physician certifies that, as of the date of
				  the certification, the insured has a terminal illness, as defined in §
											4.1102(b) of this
				  title (relating to Acceleration-of-Life-Insurance: Scope of
				  Benefits).
(2) An insured has a
				  "qualified long-term care illness" if the insured has a "long-term care
				  illness" as defined in §
											4.1102(b) of this
				  title, and a licensed health care practitioner, acting within the scope of
				  their license, certifies, within 12 months before the approval of the insured's
				  request to exercise the acceleration-of-life-insurance provision, that the
				  insured's illness or physical condition has caused the insured to:
(A) be unable to perform, without substantial
				  assistance from another individual, at least two activities of daily living for
				  a period of at least 90 days due to functional incapacity;
(B) be disabled at a level similar to the
				  level described in subparagraph (A) of this paragraph, as determined by rules
				  promulgated by the United States Secretary of the Treasury, in consultation
				  with the United States Secretary of Health and Human Services, under section
				  7702B of the Internal Revenue Code of 1986, as amended by the Health Insurance
				  Portability and Accountability Act of 1996; or
(C) require substantial supervision to
				  protect the insured from threats to the insured's health and safety due to the
				  impairment of cognitive ability.
(3) The following words and terms, when used
				  in this section, have the following meanings unless the context clearly
				  indicates otherwise.
(A) Activities of daily
				  living--Bathing, continence, dressing, eating, toileting and transferring, as
				  those terms are defined in §
												3.3804(b) of this
				  title (relating to Definitions).
(B) Impairment of cognitive ability--The
				  deterioration or loss in intellectual capacity requiring substantial
				  supervision for protection of self and others, as established by the clinical
				  diagnosis of any licensed practitioner in this state authorized to make such a
				  diagnosis. Such diagnosis must include the patient's history and physical,
				  neurological, psychological and/or psychiatric evaluations, and laboratory
				  findings.
(C) Substantial
				  supervision--Continual supervision (that may include cueing by verbal
				  prompting, gestures, or other demonstrations) by another person that is
				  necessary to protect a cognitively impaired individual from threats to the
				  individual's health or safety.