SECTION 4.1102. Acceleration-of-Life-Insurance: Scope of Benefits

(a) An acceleration-of-life-insurance benefit provision provides a special benefit under a life insurance contract that prepays all or a portion of the death benefit based on a long-term care illness, specified disease, or terminal illness.

(b) The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Life insurance contract--An individual life insurance policy, a group life insurance policy or certificate of insurance, or a rider to an individual or group life insurance policy or group certificate of insurance.

(2) Long-term care illness--An illness or physical condition that results in the inability to perform the activities of daily living or the substantial and material duties of any occupation. Evidence of a long-term care illness includes, but is not limited to, illnesses or conditions that require:

(A) confinement in a convalescent nursing home, residential care or intermediate nursing facility, defined consistently with the provisions of §3.3812 of this title (relating to Policy Standards for Provider); or

(B) adult day care services, as defined and provided consistently with §3.3804(b) of this title (relating to Definitions), and home health care services, as defined and provided consistently with §3.3804(b) of this title.

(3) Specified disease--An illness or physical condition that is likely to cause permanent disability or premature death, including, but not limited to, the following:

(A) AIDS;

(B) a malignant tumor;

(C) a condition requiring organ transplantation;

(D) a coronary artery disease resulting in acute infarction or requiring surgery;

(E) a permanent neurological deficit resulting from cerebral vascular accident; or

(F) a condition of similar severity as specified in the life insurance contract that would be expected to impair the insured's quality or length of life in the absence of appropriate medical attention.

(4) Terminal illness--An illness or physical condition, including a physical injury, that can reasonably be expected to result in death in two years or less.

(c) Any portion of the death benefit remaining after reduction of the death benefit due to payment of any acceleration-of-life-insurance benefit referred to in this section and related charges, interest or liens, as allowed by §4.1106(3) of this title (relating to Methods for Determining Benefits and Allowable Charges and Fees) must be paid upon the death of the insured.

(d) Prepayment of acceleration-of-life-insurance benefits may be in a single sum or in installments.

(e) The acceleration-of-life-insurance benefits, related charges, interest, discounts, or liens allowed under this subchapter, and the balance of the death benefit of the life insurance contract will constitute full settlement on maturity of the face amount of the contract.

(f) Specific additional requirements for life insurance contracts that pay for long-term care expenses through acceleration-of-life-insurance benefit provisions are contained in §4.1114 of this title (relating to Requirements for Acceleration-of-Life-Insurance Benefits That Fund Long-Term Care Expenses).

Source Note: The provisions of this §4.1102 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250