Provides for an accelerated death benefit rider on life insurance policies when the insured may require long term care

11 Co-sponsors

• Joseph P. Addabbo Jr.
• Ruben Diaz
• Ruth Hassell-Thompson
• Shirley L. Huntley
• Craig M. Johnson
• Liz Krueger
• George Onorato
• John L. Sampson
• Diane J. Savino
• Eric T. Schneiderman
• Toby Ann Stavisky

Title of bill

An act to amend the insurance law, in relation to an accelerated payment of the death benefit rider under a life insurance policy

Purpose

The purpose of this bill is to expand the definition of the term "life insurance" so that it includes the coverage of persons and have payouts made to such persons at times other than death. Under this bill, a life insurer would be required to offer an accelerated death benefit rider where the payment would be available upon such insured residing in a nursing home for three months or for conditions for payment provided for in Insurance Law section 1113(a) (1) (C) or (D) which relates to the provision of long term care.

Summary of provisions

Section 1: Amends Insurance Law section 1113(a) (1) to expand the definition of life insurance to include the coverage of persons who have been a resident of a nursing home for three months or more and to make such event an insurable event under a life insurance policy.

Section 2: Amends Insurance Law section 3201(c) (11) to add life insurance policies that have a trigger for payment of the benefit upon residing in a nursing home for three months or more as one of the types of policies that the Insurance Department must approve the policy form for before an insurer can begin to sell such a product to the general public.

Section 3: Amends Insurance Law section 3230 to require that a new rider for an accelerated payment of a death benefit or special surrender value be offered to persons who purchase life insurance in New York State. This rider, while mandated to be offered, can be purchased by the insured at their sole option. Further, for those life insurers that do specialize in long term care insurance or issues related to nursing home care, could offer such an accelerated payment rider through another admitted life insurer that specializes in this line of business as an addendum to the core life insurance policy.

Section 4: Amends Insurance Law section 3230(f) to add the payment of an accelerated payment of a death benefit or special surrender value upon the insured residing in a nursing home for over three months.

Justification

As the general population becomes older, more and more individuals are looking for affordable ways to pay for the financing of their nursing home and long term care. While there are available policies that provide payment for long term home health care, more products should be authorized and offered under New York Law so that consumers will have more types of insurance coverage made available to meet their specific needs or the needs of their family.

This bill expands the definition of "life insurance" so that policies can be written in New York that provide financing for those who have been in nursing home care for at least three months. currently, 49 other states offer life insurers the ability to write this type of coverage in the United States, but not New York. This bill takes care of this discrepancy.

Further, the bill requires that those insurers that offer life insurance policies must offer this coverage as a rider to the core life insurance policy. The insured is under no obligation to purchase such an accelerated death benefit rider.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

270 days after this bill shall become law.