FROM: DONALD BRYAN, ACTING COMMISSIONER
RE: ACCELERATED DEATH BENEFITS - DEFINITION OF QUALIFYING EVENT
Accelerated death benefit provisions provide the owner of an insurance policy with the option of electing to have all or a part of the death benefit paid prior to the death of the insured if the insured experiences a qualifying event. The definition of "qualifying event" at N.J.A.C. 11:4-30.3 includes terminal illness, confinement in an institution that is expected to continue until death of the insured, and "any other qualifying events which the Commissioner may approve."
The Department has been asked by an insurer for permission to treat chronic illness as a qualifying event. "Chronic illness" is defined by the insurer as the permanent inability to perform two of the six activities of daily living (bathing, continence, dressing, eating, toileting and transferring) or the presence of a debitating cognitive impairment. A qualifying event enables the policy owner to accelerate the payment of policy benefits.
The Department has reviewed the request and has concluded that the permanent inability to perform two of the six activities of daily living or the presence of a debilitating cognitive impairment constitutes a qualifying event for purposes of payment of an accelerated death benefit. Accelerated death benefit forms containing such provisions may be submitted to the Department.
Insurers may wish to submit accelerated death benefit forms for filing which contain other examples of conditions that they believe should be treated as qualifying events. Insurers are reminded that they must comply with all provisions of N.J.A.C. 11:4-30 with respect to the submission and administration of accelerated death benefit forms.
January 22, 2002 /s/ Donald Bryan , Acting Commissioner