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 4.1116 - Disclosures Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance

Current through Reg. 49, No. 28; July 12, 2024
(a) Except as
				  provided in subsection (e) of this section, on or after the effective date of
				  this subchapter, if an insurer markets, delivers, issues for delivery, or
				  renews a life insurance contract in Texas that provides only
				  acceleration-of-life-insurance benefits that are intended to qualify for
				  favorable tax treatment under federal law, the contract, and any invitation to
				  contract as provided under §
										4.1113 of this title (relating to
				  Notice and Disclosure Requirements for Marketing Materials), must include a
				  disclosure substantially similar to the disclosure set forth in this
				  subsection. When a series of words are separated by slashes (e.g.,
				  policy/certificate/rider), the insurer should choose the most appropriate word
				  or words under the circumstances. DISCLOSURE: "The
				  acceleration-of-life-insurance benefits offered under this
				  policy/certificate/rider are intended to qualify for favorable tax treatment
				  under the Internal Revenue Code of 1986. If the acceleration-of-life-insurance
				  benefits qualify for such favorable tax treatment, the benefits will be
				  excludable from your income and not subject to federal taxation. Tax laws
				  relating to acceleration-of-life-insurance benefits are complex. You are
				  advised to consult with a qualified tax advisor about circumstances under which
				  you could receive acceleration-of-life-insurance benefits excludable from
				  income under federal law."
(b)
				  Except as provided in subsection (e) of this section, on or after the effective
				  date of this subchapter, if an insurer markets, delivers, issues for delivery,
				  or renews a life insurance contract in Texas that contains an
				  acceleration-of-life-insurance benefits provision that meets the requirements
				  of this subchapter, but that allows benefits to be accelerated in circumstances
				  in which such benefits would not qualify for favorable tax treatment under
				  federal law, the contract, and any invitation to contract as provided under
				  §
										4.1113 of this title, must include
				  a disclosure substantially similar to the disclosure set forth in this
				  subsection. When a series of words are separated by slashes (e.g.,
				  policy/certificate/rider), the insurer should choose the most appropriate word
				  or words under the circumstances. DISCLOSURE: "The
				  acceleration-of-life-insurance benefits offered under this
				  policy/certificate/rider may or may not qualify for favorable tax treatment
				  under the Internal Revenue Code of 1986. Whether such benefits qualify depends
				  on factors such as your life expectancy at the time benefits are accelerated or
				  whether you use the benefits to pay for necessary long-term care expenses, such
				  as nursing home care. If the acceleration-of-life-insurance benefits qualify
				  for favorable tax treatment, the benefits will be excludable from your income
				  and not subject to federal taxation. Tax laws relating to
				  acceleration-of-life-insurance benefits are complex. You are advised to consult
				  with a qualified tax advisor about circumstances under which you could receive
				  acceleration-of-life-insurance benefits excludable from income under federal
				  law."
(c) Except as provided in
				  subsection (e) of this section, on or after the effective date of this
				  subchapter, if an insurer markets, delivers, issues for delivery, or renews a
				  life insurance contract in Texas that provides acceleration-of-life-insurance
				  benefits, the contract, and any invitation to contract as provided under §
										4.1113 of this title, must include
				  a disclosure substantially similar to the disclosure set forth in this
				  subsection. DISCLOSURE: "Receipt of acceleration-of-life-insurance benefits may
				  affect your, your spouse or your family's eligibility for public assistance
				  programs such as medical assistance (Medicaid), Aid to Families with Dependent
				  Children (AFDC), supplementary social security income (SSI), and drug
				  assistance programs. You are advised to consult with a qualified tax advisor
				  and with social service agencies concerning how receipt of such a payment will
				  affect you, your spouse and your family's eligibility for public
				  assistance."
(d) The disclosure
				  requirements of this section must be provided only with the document actually
				  containing the acceleration-of-life-insurance provisions. For example, if
				  acceleration-of-life-insurance benefits are provided through a rider to a life
				  policy, the disclosures must only be provided with the rider, not the
				  policy.
(e) In regard to
				  certificates of coverage for group life insurance policies, the disclosures
				  required by this section must be provided only to certificate holders obtaining
				  group life coverage on or after the effective date of this
				  subchapter.