SECTION 3.3845. Permitted Refunds of Premium Provisions

A long-term care policy that contains a refund of premium provision shall comply with the following:

(1) The refund of premium benefit provision shall not provide a withdrawal value.

(2) The refund of premium provision shall be appropriately captioned in the policy.

(3) The amount of premium being refunded shall be equal to all or a stated portion of the premiums paid, less claims paid, during a specified time or interval during the premium payment period for the policy.

(4) The refund of premiums shall be applied as a reduction in future premiums or to increase future benefits. This provision does not apply to any refund on the death of the insured or a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract.

(5) The policy shall provide for the refund of premium benefit to be paid automatically upon the death of the insured to the insured's designated beneficiary.

(6) The policy shall provide that the insured may discontinue the benefit on any anniversary date with a corresponding reduction of premiums.

(7) The premium applicable to the refund of premium benefit shall be fully disclosed to the prospective insured in or with the outline of coverage and shall be stated separately on the policy specifications page.

(8) A qualified actuary shall certify as to the reasonability of rates charged for the refund of premium benefit and the reserving required by §3.3819 of this title (relating to Requirement for Reserve) shall include the refund of premium benefit.

(9) The refund of premium benefit shall not be marketed or titled as a cash-value, return-of-premium or nonforfeiture benefit.

Source Note: The provisions of this §3.3845 adopted to be effective May 8, 1997, 22 TexReg 3786