31.14.02.10

.10 Reserve Standards.

A. Life Insurance Policies That Accelerate Benefits for Long-Term Care.

(1) This section applies to long-term care benefits that are provided through the acceleration of benefits under group or individual life insurance policies or riders to group or individual life insurance policies.

(2) Policy reserves for the benefits for the policies and riders subject to this section shall be determined in accordance with Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland.

(3) Claim reserves for the policies and riders subject to this section shall be established in the case when the policy or rider is in claim status.

(4) Except as permitted in §A(5) of this regulation, reserves for policies and riders subject to this section shall be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates.

(5) An insurer may determine the reserves based on single decrement approximations, if:

(a) The calculation produces essentially similar reserves as the calculation described in §A(4) of this regulation;

(b) The calculation produces a reserve that is clearly more conservative than the calculation described in §A(4) of this regulation; or

(c) The reserve is immaterial.

(6) The calculations described in §A(4) and (5):

(a) May take into account the reduction in life insurance benefits due to the payment of long-term care benefits; and

(b) May not result in a reserve that is less than the reserve for the life insurance benefit under the policy, without a long-term care benefit.

(7) In the development and calculation of reserves for policies and riders subject to this section, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to the following:

(a) Definition of insured events;

(b) Covered long-term care facilities;

(c) Existence of home convalescence care coverage;

(d) Definition of facilities;

(e) Existence or absence of barriers to eligibility;

(f) Premium waiver provision;

(g) Renewability;

(h) Ability to raise premiums;

(i) Marketing method;

(j) Underwriting procedures;

(k) Claims adjustment procedures;

(l) Waiting period;

(m) Maximum benefit;

(n) Availability of eligible facilities;

(o) Margins in claim costs;

(p) Optional nature of benefit;

(q) Delay in eligibility for benefit;

(r) Inflation protection provisions; and

(s) Guaranteed insurability option.

(8) Any applicable valuation morbidity table used by the insurer shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

B. When long-term care benefits are provided other than as described in §A of this regulation, reserves shall be determined in accordance with Regulations .11—.14 of this chapter.