Use of graded benefit provisions in life insurance and annuities for preneed contracts
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Governs acceptance and required disclosures for graded benefit provisions in life insurance policies or annuities used to fund preneed funeral and cemetery contracts in Alabama; applies to all authorized insurers issuing such products and to preneed sellers.
No material clinical or coverage changes in this revision.
Approval criteria and responsibilities
Approval criteria and responsibilities
Conditions under which graded benefit provisions will be approved for use in connection with preneed contracts:
ALL of the following
- Existence, use, and possible effects of graded benefit provisions must be properly disclosed in the policy or annuity form.
- All policy forms must comply with the disclosure requirements in Department regulation 482-1-131, particularly rule 482-1-131-.06.
- Any life insurance or annuities written to fund preneed contracts must, in the aggregate, cover at least the initial retail price of the preneed contract subject to operation of any disclosed and approved graded benefit provision.
- Preneed sellers are responsible for furnishing appropriate advice to the preneed buyer about whether funding by life insurance or annuities is advisable under the circumstances.
Acceptance and required disclosures
Accept graded benefit provisions only with required disclosures
The Department will accept graded benefit provisions in life insurance policies and annuities used to fund preneed contracts provided the existence, use, and possible effects of the graded benefit provision are properly disclosed in the policy or annuity form. All policy forms must comply with the disclosure requirements in Department regulation 482-1-131, particularly rule 482-1-131-.06, and any life insurance or annuities written to fund preneed contracts must, in the aggregate, cover at least the initial retail price of the preneed contract subject to the operation of any disclosed and approved graded benefit provision.
- Existence, use, and possible effects of graded benefit provisions must be set out in the policy or annuity form.
- All policy forms must comply with Department regulation 482-1-131, especially rule 482-1-131-.06.
- Life insurance or annuities written to fund preneed contracts must, in the aggregate, cover at least the initial retail price of the preneed contract, subject to disclosed graded benefit provisions.
Key definitions
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