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 3.4316 - 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 §
										3.4313
				  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
				  back-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 a life insurance contract 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 §
										3.4313
				  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
				  back-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 §
										3.4313
				  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. 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 regards 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.