83-7-109 - Requirement that name given coverage be descriptive of coverage provided; disclosure of information; signatures.
§ 83-7-109. Requirement that name given coverage be descriptive of coverage provided; disclosure of information; signatures.
(1) The name given the coverage must be descriptive of the coverage provided, and the terminology "accelerated benefit" shall be included in the description.
(2) Clear disclosure is required at the time of application for the policy and at the time the accelerated benefit payment request is submitted of the potential tax implications of receiving this payout. The disclosure statement shall indicate that receipt of these accelerated benefits may be taxable, and insured should seek assistance from their personal tax advisor. Such disclosure shall be prominently displayed on the first page of the policy or rider and any other related documents.
(3) Prior to or concurrently with the application, the applicant shall be given an illustration numerically demonstrating the effect of the payment of a benefit on the policy's cash value, death benefit, premium, policy loans and policy liens. In the event of direct mail solicitations, the disclosure shall be made upon acceptance of the application.
(4) Prior to or concurrently with the application, the applicant shall be given a written disclosure including, but not necessarily limited to, a brief description of the accelerated benefit and definitions of the conditions or occurrences triggering payment of the benefits. The disclosure shall be signed by the applicant, the policy owner and writing agent. In the event of direct mail solicitations, the disclosure shall be made upon acceptance of the application.
(5) This statement shall appear on the face of every policy or rider: "Cash values, loan values and the death benefit will be reduced if you receive an accelerated benefit." For policies which have no cash or loan values, this statement shall be appropriately modified.
Sources: Laws, 1991, ch. 464, § 5, eff from and after July 1, 1991.