(a) Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums; provided that the expected loss ratio is at least sixty per cent and calculated in a manner that provides for adequate reserving of the long-term care insurance risk. Prior to any approval, the commissioner shall evaluate the expected loss ratio, and due consideration shall be given to all relevant factors, including:
Terms Used In Hawaii Revised Statutes 431:10H-226
Dependent: A person dependent for support upon another.
Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
Long-term care insurance: means any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than twelve consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. See Hawaii Revised Statutes 431:10H-104
Policy: means , for the purposes of this article, any policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this State by an insurer; fraternal benefit society; nonprofit health, hospital, or medical service corporation; prepaid health plan; health maintenance organization; or any similar organization. See Hawaii Revised Statutes 431:10H-104
(1) Statistical credibility of incurred claims experience and earned premiums;(2) The period for which rates are computed to provide coverage;(3) Experienced and projected trends;(4) Concentration of experience within early policy duration;(5) Expected claim fluctuation;(6) Experience refunds, adjustments, or dividends;(7) Renewability features;(8) All appropriate expense factors;(9) Interest;(10) Experimental nature of the coverage;(11)Policy reserves;(12) Mix of business by risk classification, if applicable; and(13) Product features such as long elimination periods, high deductibles, and high maximum limits.(b) For purposes of this section, the commissioner shall consult with a qualified long-term care actuary.(c) Subsection (a) shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:
(1) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;(2) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements for life insurance;(3) The policy meets the disclosure requirements of section 431:10H-114 as applicable;(4) Any policy illustration that meets the applicable requirements for policy illustration;(5) An actuarial memorandum is filed with the insurance division that includes:
(A) A description of the basis on which the long-term care rates were determined;(B) A description of the basis for the reserves;(C) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;(D) A description and a table of each actuarial assumption used. For expenses, an insurer shall include per cent of premium dollars per policy and dollars per unit of benefits, if any;(E) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;(F) The estimated average annual premium per policy and the average issue age;(G) A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used, and if used, the statement shall include a description of the type or types of underwriting used such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and(H) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.(d) This section shall apply to all long-term care insurance policies or certificates except those covered under sections 431:10H-207.5 and 431:10H-226.5.
