Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-97 - Life settlement regulation › Section 284-97-910 - Insurance company disclosure form for other than term life insurance policies

Current through Register Vol. 24-14, July 15, 2024
RCW  48.102.100 requires that
				insurers provide a notice to owners of individual life insurance policies at
				certain times. The following is the only document approved by the commissioner
				to give this notice.
Important information about your life insurance policy from the
				State of Washington Office of the Insurance Commissioner
Life insurance is a critical part of a broader
							 financial plan. There are many options available, and you have the right to
							 shop around and seek advice from different financial advisers in order to find
							 the options best suited to your needs.
You are encouraged to consider the following possible
							 alternatives to [requesting a surrender of your life insurance policy,
							 requesting accelerated death benefits under your life insurance policy, or
							 letting your life insurance policy lapse*]. These alternatives include, but are
							 not limited to:
.
Accelerated Death Benefit:
Your policy
							 may provide an early or accelerated discounted benefit payment if you have a
							 terminal or chronic illness.
.
Cash Surrender:
Your policy may have a
							 cash surrender value your life insurer would pay you if you cancel it.
.
Gift:
You may be able to gift your
							 policy to your beneficiary, who would then assume responsibility for paying
							 premiums.
.
Life Settlement:
You may be able to sell
							 your life insurance policy to a third party for an amount that, under
							 Washington law must be greater than the cash surrender value or accelerated
							 death benefits under your policy. You pay no further premium. The third party
							 becomes the policyholder and receives the benefit upon the insured's
							 death.
.
Maintain Your Policy:
You may be able to
							 maintain your life insurance policy in force by paying the premiums directly or
							 using your current policy values to pay the premiums.
.
Policy Changes:
You may be able to
							 reduce or eliminate future premium payments by obtaining a paid-up policy, by
							 reducing optional coverages, or through other options available from your life
							 insurer.
.
Policy Loan:
You may be able to take out
							 a loan from your life insurance company using the cash value of your policy as
							 collateral. Loan proceeds can be used to pay the premiums or for other
							 purposes.
.
Third-Party Loan:
You may be able to get
							 a loan from another party to pay your policy's premiums. In return, the lender
							 may require an assignment of a portion or all of the policy's death
							 benefits.
These options may or may not be available depending
							 on your circumstances and the terms of your life insurance policy. Please see
							 your policy or contact your life insurance company, financial advisor, agent or
							 broker to determine your particular options.
If you're a Washington state resident and have
							 questions about life insurance and your rights, contact the Office of the
							 Insurance Commissioner at 1-800-562-6900, or go to
www.insurance.wa.gov
. Ask questions
							 if you don't understand your policy. Here's a list of commonly used
							 terms:
Accelerated death benefit:
A benefit
							 allowing terminally ill or chronically ill life insurance policyholders to
							 receive cash advances of all or part of the expected death benefit. The
							 accelerated death benefit can be used for health care treatments or any other
							 purpose.
Cash surrender value:
This term is also
							 called "cash value," "surrender value," and "policyholder's equity." The amount
							 of cash due to a policyholder who requests the insurance company cancel their
							 life insurance policy before it matures or death occurs.
Expected death benefit:
The face amount
							 of the policy, less any policy loan amounts, that the insurance company is
							 expected to pay the beneficiaries named in the life insurance policy upon the
							 death of the insured.
Lapse:
Refers to a life insurance policy
							 ending or expiring when a policyholder stops making premium payments.
Life settlement:
Refers to a contract in
							 which the policyholder sells his or her life insurance policy to a third party
							 for a one-time cash payment which is greater than the cash surrender value, but
							 less than the death benefit of the policy. A life settlement includes a
							 viatical settlement, defined below.
Policy loan:
A loan issued by an
							 insurance company using the cash value of a person's life insurance policy as
							 collateral.
Viatical settlement:
An arrangement in
							 which someone with a terminal illness sells his or her life insurance policy at
							 an amount less than the death benefit. The ill person receives cash, and the
							 buyer receives the full amount of the death benefit. This death benefit is
							 payable once the former policyholder dies.
This brochure is for informational purposes
							 only and does not constitute an endorsement of any of the options described
							 above.
*
A life insurance company should choose among these
							 three phrases to state the appropriate phrase that fits the situation of the
							 particular policy owner to whom the notice is being sent.
Statutory Authority:
				  RCW
				  48.02.060,
				  48.102.011,
				  48.102.046,
				  48.102.100,
				  48.102.170,
				  48.102.021,
				  48.102.041, and
				  48.102.080. 10-04-042 (Matter No.
				  R 2009-14), §
										284-97-910, filed 1/27/10,
				  effective 2/27/10.
Reviser's note:
The brackets and enclosed
				  material in the text of the above section occurred in the copy filed by the
				  agency.