Article 2.1 - Accelerated Death Benefits

California Insurance Code — §§ 10295-10295.19

Sections (12)

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

(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.

§ 10295.1

Amended by Stats. 2018, Ch. 98, Sec. 6. (AB 2180) Effective January 1, 2019.

(a)An accelerated death benefit as defined in paragraph (1) of subdivision (b) of Section 10295 shall comply with, and shall explain all of, the following:

(1)That the accelerated death benefit is fixed at the time the insurer approves the request for the accelerated death benefit.

(2)That the payment of the accelerated death benefit is not conditioned on the receipt of long-term care or medical services.

(3)That the insured shall have the option to take the accelerated death benefit in a lump sum on the occurrence of a qualifying event, as well as an option to receive the benefit in periodic payments for a certain period only. The

insured shall have the choice of requesting a lump sum that is equal to the maximum amount of the accelerated death benefit, or requesting a lump sum that is less than the maximum amount. For purposes of this paragraph, “lump sum” shall mean that a claim is paid in a single payment.

(4)That the accelerated death benefit may not restrict the insured’s use of the proceeds.

(5)That the payment of the accelerated death benefit is due immediately upon receipt of the due written proof of eligibility.

(6)That, prior to the payment of the accelerated death benefit, the insurer is required to obtain from an assignee or irrevocable beneficiary, if any, a signed acknowledgment of concurrence for payout. If the insurer making the accelerated death benefit is itself the assignee under the policy, the acknowledgment is not

required.

(7)That if any death benefit remains after payment of an accelerated death benefit, the accidental death benefit provision, if any, in the policy shall not be affected by the payment of the accelerated death benefit.

(b)The accelerated death benefit shall also provide for all of the following:

(1)A maximum amount that may be accelerated.

(2)An explanation that the insured may accelerate more than once on a qualifying event up to the maximum amount.

(3)An explanation that the insured may accelerate on more than one of the qualifying events specified in the supplemental provision up to the maximum amount.

(4)A

statement that the policy, rider, endorsement, or certificate pays proceeds that are or are not intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code (26 U.S.C. Sec. 101(g)), if applicable.

(c)The insurer shall advise the policyholder or certificate holder that there may be tax consequences of accepting an amount above the amount that would be tax qualified under the Internal Revenue Code.

(d)The accelerated death benefit shall not contain any preexisting condition limitation and shall not contain any requirement that acceleration be conditioned on a prior hospitalization or institutionalization.

(e)The accelerated death benefit shall contain an explanation of how the insured will pay for the accelerated death benefit, whether by paying a portion of the premium for the life

insurance policy, by paying a fee at the time of the acceleration, by paying the cost of insurance charge, or by paying the administrative expense charge, together with an illustration. If there is a premium or cost of insurance charge, or a charge imposed upon the acceleration, a generic illustration numerically demonstrating any effect of the payment of a benefit on the policy’s cash value, accumulation account, death benefit, premium, policy loans, and policy liens shall suffice for this purpose.

(f)(1) Every accelerated death benefit that pays proceeds intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code (26 U.S.C. Sec. 101(g)) shall be identified as such by prominently displaying and printing that intention on page one of the accelerated benefit policy provision, rider, endorsement, or certificate.

(2)Every accelerated

death benefit that pays proceeds that are not intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code (26 U.S.C. Sec. 101(g)) shall be identified as such by prominently displaying and printing that intention on page one of the accelerated death benefit policy provision, rider, endorsement, or certificate.

§ 10295.10

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

An insurer may not:

(a)Cancel, nonrenew, or otherwise terminate an accelerated death benefit on the grounds of the age or the deterioration of the mental or physical health of the insured individual or certificate holder.

(b)Terminate a policy, certificate, or rider, or contain a provision that allows the premium for an in-force policy, certificate, or

rider, to be increased due to the divorce of a policyholder or certificate holder.

§ 10295.11

Amended by Stats. 2025, Ch. 558, Sec. 21. (AB 487) Effective January 1, 2026.

(a)An accelerated death benefit shall not be advertised or marketed as long-term care insurance, nursing home insurance, or home care insurance. Any advertisement, description, comparison, marketing material, or illustration shall state in bold type:

“This is a life insurance benefit that also gives you the option to accelerate some or all of the death benefit in the event that you meet the criteria for a qualifying event described in the policy. This policy or certificate does not provide long-term care insurance subject to California long-term care insurance law. This policy or certificate is not a California Partnership for Long-Term Care program policy. This policy or certificate is not a Medicare supplement (policy or certificate).”

insurer shall also include in any advertisement or marketing materials for these insurance policies all of the following:

(1)A statement that the policy or certificate pays proceeds that are or are not intended to receive favorable tax treatment under Section 101(g) of the Internal Revenue Code (26 U.S.C. Sec. 101(g)).

(2)A description of the accelerated death benefits provided by the policy, including a description of the acceleration of the death benefit to pay an unrestricted cash benefit when the insured has become chronically ill or otherwise eligible for benefits from a qualified event.

(3)A comparison between the benefits provided by life insurance policies, riders, or endorsements that contain accelerated death benefits and the benefits provided by long-term care insurance.

(b)Advertising for term life insurance policies or certificates that contain an accelerated death benefit to be attached to an existing term life policy shall include a prominent statement that the accelerated death benefit will terminate with the policy.

(c)On or after January 1, 2014, every insurer offering accelerated death benefits shall file with the commissioner copies of all advertising for accelerated death benefits that the insurer proposes to disseminate in the state prior to use of that material. The commissioner shall have the authority to disapprove any advertising that does not meet the requirements of this code. If the commissioner disapproves the advertising, the insurer shall not use and shall stop using the disapproved advertising. Nothing in this subdivision shall be construed as requiring prior approval of advertising prior to dissemination in this

state.

§ 10295.12

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

(a)Insurers shall ensure that agents offering, marketing, or selling accelerated death benefits on their behalf are able to describe the differences between benefits provided under an accelerated death benefit and benefits provided under long-term care insurance, as follows:

(1)The difference between the benefits afforded to an insured through an accelerated death benefit and a long-term care

insurance policy or rider.

(2)The differences between benefit eligibility criteria.

(3)Whether an elimination period applies to either an accelerated death benefit or long-term care insurance and a description of the elimination period.

(4)The benefits under the accelerated death benefit or long-term care insurance if benefits are never needed.

(5)The benefits under the accelerated death benefit or long-term insurance if benefits are needed.

(6)Restrictions on benefit amounts.

(7)Tax treatment of benefits.

(8)Income and death benefit considerations.

(b)Completion of California agent education or continuing education for long-term care insurance shall meet the requirements of this section.

§ 10295.13

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

In addition to other unfair trade practices described in this code, the following acts and practices in the sale of insurance under this article are prohibited:

(a)Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign,

borrow on or convert any insurance policy, or to take out a policy of insurance with another insurer.

(b)High pressure tactics. Employing any method of marketing having the effect of, or tending to, induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

(c)Cold lead advertising. Making use directly or indirectly of any method of marketing that fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

§ 10295.14

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

(a)Accelerated death benefits shall comply with the provisions in Sections 10113.71 and 10113.72.

(b)Every insurer offering term life insurance with accelerated death benefits or any rider that provides for accelerated death benefits described in Section 10295 shall also offer a waiver of premium benefit for the life insurance premium and any premium charged for the accelerated death benefit as

described in Section 10271.1.

(c)Every insurer offering a cash value life insurance policy or rider offering accelerated death benefits described in Section 10295 shall disclose all premium default protection options in the policy and at the time of the application, including waiver of premium options available under Section 10271.1 and automatic premium loans.

§ 10295.15

Amended by Stats. 2014, Ch. 360, Sec. 4. (AB 2578) Effective January 1, 2015.

(a)Except at the request of the policyholder or contractholder, all accelerated death benefit provisions or supplemental contracts shall be renewable for the life of the underlying life insurance policy, provided the premiums are timely paid. The statement shall be prominently displayed on the first page of the accelerated death benefit policy or rider.

(b)If an accelerated death benefit is offered with an underlying term life insurance policy, the accelerated death benefit shall include a prominent statement on page one that the accelerated death benefit terminates with the policy.

§ 10295.16

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

Termination of an accelerated death benefit shall not prejudice the payment of benefits for any qualifying event that occurred while the accelerated death benefit was in force.

§ 10295.17

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

An insurer that fails to conform to the requirements provided under this article shall be subject to Article 6.5 (commencing with Section 790) of Chapter 1 of Part 2 of Division 1.

§ 10295.18

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

Accelerated death benefits shall not limit or exclude coverage by type of illness, treatment, medical condition, or accident, except under the circumstances described in paragraphs (1) to (4), inclusive, of subdivision (g) of Section 10271.

§ 10295.19

Added by Stats. 2013, Ch. 345, Sec. 7. (SB 281) Effective January 1, 2014.

A policy, certificate, rider, or endorsement shall include a provision giving the policyholder or certificate holder the right to appeal to the insurer a decision regarding benefit eligibility.