(a) Except as otherwise stated in this section, every life insurance contract containing an acceleration-of-life-insurance benefit provision shall be subject to the notice and disclosure requirements in paragraphs (1)-(5) of this section.   (1) Except as otherwise provided in this paragraph, the face of every such life insurance contract shall contain a prominent notice printed, over-printed or stamped, as appropriate, substantially as follows: "Death benefits, cash values, and loan values will be reduced if an acceleration-of-life-insurance benefit is paid." This statement shall be appropriately modified for contracts which have no cash or loan values, or in which the cash value is not reduced.   (2) The title of any acceleration-of-life-insurance benefit shall be descriptive of the coverage provided and shall use such terms as "acceleration-of-life-insurance benefit," "accelerated benefit" or words of similar import.
  (3) At the time of the payment of a lump sum acceleration-of-life-insurance benefit, or, if periodic payments are being made, no less frequently than every 12 months, the insurer shall send a statement to the owner or holder of the life insurance contract, specifying:     (A) the amount of benefits paid (or the amount of benefits paid since the last report);     (B) the effect of the acceleration-of-life-insurance benefit payment on the death benefit, face amount, specified amount, accumulation values, cash values, loan amounts, future charges, and future premiums; and     (C) the amount of benefits remaining available for acceleration.   (4) Notice that the owner of the life insurance contract will receive the statement described in paragraph (3) of this subsection shall be included in the acceleration-of-life-insurance benefit provisions of the life insurance contract.   (5) As
appropriate, the disclosures contained in either subsection (a) or (b) of §3.4316 of this title (relating to Disclosures Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance), and the disclosure contained in subsection (c) of §3.4316, or disclosures substantially similar to these disclosures, must be included on or attached to the front page of each life insurance contract subject to this subchapter, except as provided in subsection (e) of §3.4316. (b) The notice and disclosure requirements in subsection (a) must be provided only with the document actually containing the acceleration-of-life-insurance provisions. For example, if acceleration-of-life insurance benefits are provided through a rider to a life policy, the disclosures must only be provided with the rider, not the policy.


Source Note: The provisions of this §3.4312 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092.