Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES › Subchapter CC - STANDARDS FOR ACCELERATION-OF-LIFE-INSURANCE BENEFITS FOR INDIVIDUAL AND GROUP POLICIES AND RIDERS › Section 3.4315 - 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
				  §
											3.4302(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 §
											3.4302(b)
				  of this title, and a licensed health care practitioner, acting within the scope
				  of his or her license, certifies, within 12 months prior to 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), 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 shall 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 shall include the patient's history and physical,
				  neurological, psychological and/or psychiatric evaluations, and laboratory
				  findings.
(C) Substantial
				  supervision--Continual supervision (which 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.