(a) An accelerated death benefit, as described in this section, shall not be offered, sold, issued, or marketed as health, accident, or long-term care insurance. An accelerated death benefit shall not reimburse or provide specific coverage for any health, accident, or long-term care insurance benefits.

(b) (1) For the purposes of this article, an “accelerated death benefit” means a provision, endorsement, or rider added to a life insurance policy that provides for the advance payment of any part of the death proceeds, payable upon the occurrence of a qualifying event in accordance with Section 10295.1.

(2) For the purposes of this article, “qualifying event” means that subparagraph (A) or (B) applies.

(A) The insured has a medical condition that would, in the absence of treatment, result in death within a limited period of time, as defined by the supplemental benefit, but that shall not be restricted to a period of less than six months.

(B) (i) The insured has a chronic illness as defined in subparagraph (B) of paragraph (5) of subdivision (b) of Section 10271.1.

(ii) For policies intended to be federally tax qualified, the insurer shall require that a licensed health care practitioner, independent of the insurer, certifies that the insured meets the definition of “chronically ill individual” as defined under the federal Health Insurance Portability and Accountability Act (Public Law 104-191). The accelerated death benefit shall explain subclauses (I) through (IV) and comply with all of the following:

(I) An insured has the option of submitting a certification to the insurer or submitting a notice of claim and requesting that the insurer conduct the assessment. If the insured requests that the insurer conduct the assessment, the insurer shall provide an independent licensed health care practitioner to conduct the assessment. If a health care practitioner makes a determination, pursuant to this clause, that an insured does not meet the definition of “chronically ill individual,” the insurer shall notify the insured that the insured shall be entitled to a second assessment by a licensed health care practitioner, upon request, who shall personally examine the insured. The requirement for a second assessment shall not apply if the initial assessment was performed by a practitioner who otherwise meets the requirements of this clause and who personally examined the insured.

(II) The assessments conducted pursuant to this clause shall be performed promptly with the certification completed as quickly as possible to ensure that an insured’s benefits are not delayed. The written certification shall be renewed every 12 months.

(III) The costs to have a licensed health care practitioner certify that an insured meets, or continues to meet, the definition of “chronically ill individual,” shall not count against the lifetime maximum of the policy or certificate.

(IV) In order to be considered “independent of the insurer,” a licensed health care practitioner shall not be an employee of the insurer and shall not be compensated in any manner that is linked to the outcome of the certification.

(V) It is the intent of the Legislature in enacting this clause that the practitioner’s assessments be unhindered by financial considerations.

(VI) This clause shall apply only to a policy or certificate intended to be federally tax qualified.

(3) For the purposes of this article, “applicant” means any of the following:

(A) In the case of an individual life insurance policy with an accelerated death benefit, the person who seeks to contract for benefits.

(B) (i) In the case of a group life insurance policy with an accelerated death benefit, the proposed certificate holder.

(ii) “Certificate” means any certificate issued under a group life insurance policy that includes an accelerated death benefit.

(4) For the purposes of this article, “supplemental benefit” means a rider to or provision in a life insurance policy, certificate, or annuity contract that provides a benefit as set forth in subdivision (a) of Section 10271.

(c) A life insurance policy that accelerates death benefits if the insured is chronically ill and requires that the insured receives long-term care services described in Section 10231.2, shall not be considered an accelerated death benefit for the purposes of this article.

(d) This section does not prohibit an insurer from including other riders to a life insurance policy, such as a terminal illness rider, that are not subject to this article.

(Amended by Stats. 2021, Ch. 627, Sec. 16. (AB 1511) Effective January 1, 2022.)