text:
(a) Applications, if any, or forms supporting an application, if any, for accelerated death benefits shall contain clear, unambiguous, short, and simple questions designed to ascertain the health condition of the applicant. Each health-related question shall contain only one health status inquiry and shall require only a “yes” or “no” answer, except that the application may include a request for the name of any prescribed medication and the name of the prescribing physician. If the application requests the name of any prescribed medication or the prescribing physician, then any mistake or omission shall not be used as a basis for the denial of a claim or the rescission of the accelerated death benefit or life insurance policy or certificate.

(b) The following warning shall be printed conspicuously and in close conjunction with the applicant’s signature block:

“Caution: If your answers on this application are misstated or untrue, the insurer may have the right to deny benefits or rescind your accelerated death benefit coverage.”

(c) If an insurer does not complete medical underwriting for the accelerated death benefit separate from underwriting for the life insurance policy and resolve all reasonable questions arising from information submitted on or with an application before issuing the accelerated death benefit, then the insurer may only rescind the accelerated death benefit or life insurance policy or certificate or deny an otherwise valid claim upon clear and convincing evidence of fraud or material misrepresentation of the risk by the applicant. The evidence shall do all of the following:

(1) Pertain to the condition for which benefits are sought.

(2) Involve a chronic condition or involve dates of treatment before the date of application.

(3) Be material to the acceptance for coverage.

(d) An accelerated death benefit may not be field issued.

(e) The contestability period for a life insurance policy or certificate that contains an accelerated death benefit shall comply with paragraph (3) of subdivision (c) of Section 10271.

(f) A copy of the completed application shall be delivered to the insured at the time of delivery of the life insurance policy or certificate that contains an accelerated death benefit.

history: (History: Amended by Stats. 2018, Ch. 98, Sec. 8. (AB 2180) Effective January 1, 2019.)

article: 2.1. Accelerated Death Benefits


kind: section

code: INS

text:
(a) When a policyholder or certificate holder requests an acceleration of death benefits, the insurer shall send a statement to the policyholder or certificate holder and irrevocable beneficiary showing any effect that the payment of the accelerated death benefit would have on the policy’s cash value, accumulation account, death benefit, premium, policy loans, and policy liens. The statement shall disclose that receipt of accelerated death benefit payments may adversely affect the recipient’s eligibility for Medicaid or other government benefits or entitlements. In addition, receipt of an accelerated death benefit payment may be taxable and assistance should be sought from a personal tax adviser. When a previous disclosure statement becomes invalid as a result of an acceleration of the death benefit, the insurer shall send a revised disclosure statement to the policyholder or certificate holder and irrevocable beneficiary.

(b) The accelerated death benefit shall be effective not more than 30 days following the effective date of the policy provision, rider, endorsement, or certificate.

(c) If the insurer charges a separate premium for the accelerated death benefit, then the insurer may also offer a waiver of premium benefit as defined in subdivision (a) of Section 10271.1. At the time the waiver of the accelerated death benefit premium benefit is claimed, the insurer shall explain any continuing premium requirement to keep the underlying policy in force.

(d) An insurer shall not unfairly discriminate among insureds with different qualifying events covered under the policy or among insureds with similar qualifying events covered under the policy. An insurer shall not apply further conditions on the payment of the accelerated death benefits other than those conditions specified in the accelerated death benefit.

(e) No later than one month after payment of an accelerated death benefit, the insurer shall provide the policyholder or certificate holder with a report of any accelerated death benefits paid out during the prior month, an explanation of any changes to the policy or certificate, death benefits, and cash values on account of the benefits being paid out, and the amount of the remaining benefits that can be accelerated at the end of the prior month. The insurer may use a calendar month or policy or certificate month.

(f) The conversion benefit available to group certificate holders on termination of employment pursuant to paragraph (2) of subdivision (a) of Section 10209 shall include a benefit comparable to the accelerated death benefit. This requirement may be satisfied by an individual policy or certificate. This requirement, subject to the approval of the commissioner, may be satisfied by arrangement with another insurer to provide the required coverage.

(g) When payment of an accelerated death benefit results in a pro rata reduction in cash value, the payment may be applied toward repaying a portion of the loan equal to a pro rata portion of any outstanding policy loans if disclosure of the effect of acceleration upon any remaining death benefit, cash value or accumulation account, policy loan, and premium payments, including a statement of the possibility of termination of any remaining death benefit, is provided to the policyholder or certificate holder. The policyholder or certificate holder shall provide written consent authorizing any other arrangement for the repayment of outstanding policy loans.

history: (History: Amended by Stats. 2018, Ch. 98, Sec. 9. (AB 2180) Effective January 1, 2019.)

division: 2. CLASSES OF INSURANCE

part: 2. LIFE AND DISABILITY INSURANCE

article: 2.1. Accelerated Death Benefits

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 2.1. Accelerated Death Benefits


text:
(a) The insurer may require a premium charge or cost of insurance charge for the accelerated death benefit. This charge shall be based on sound actuarial principles. In the case of group insurance, the additional cost may also be reflected in the experience rating.

(b) (1) The insurer may pay a present value of the face amount. The calculation shall be based on any applicable actuarial discount appropriate to the policy design. The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles and disclosed in the contract or actuarial memorandum required in Section 10295.4. The maximum interest rate used shall be no greater than the greater of one of the following:

(A) The current yield on 90-day treasury bills.

(B) The current maximum statutory adjustable policy loan interest rate.

(2) The interest rate accrued on the portion of the lien that is equal in amount to the cash value of the life insurance policy at the time of the supplemental benefit acceleration shall be not more than the policy loan interest rate stated in the contract.

(c) (1) Except as provided in paragraph (2), when an accelerated death benefit is payable, there shall not be more than a pro rata reduction in the cash value based on the percentage of death benefits accelerated to produce the accelerated death benefit payment.

(2) Alternatively, the payment of accelerated death benefits, any administrative expense charges, any future premiums, and any accrued interest can be considered a lien against the death benefit of the life insurance policy and access to the cash value of the life insurance policy may be restricted to any excess of the cash value over the sum of any other outstanding loans and the lien. Future access to additional policy loans may also be limited to any excess of the cash value over the sum of the lien and any other outstanding policy loans.

(d) When payment of an accelerated death benefit results in a pro rata reduction in the cash value of the life insurance policy, the payment shall not be applied toward repaying an amount greater than a pro rata portion of any outstanding policy loans.

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

chapter: 4. Standard Provisions in Disability Policies

article: 2.1. Accelerated Death Benefits


text:
(a) An applicant for an accelerated death benefit shall have the right to return the accelerated death benefit policy or certificate by first-class United States mail within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. If the accelerated death benefit is purchased as an endorsement or rider at the same time as the base life insurance policy, then the endorsement or rider may be returned within 30 days. The underlying life insurance policy shall be otherwise subject to this code.

(b) The return of a life insurance policy or certificate that contains an accelerated death benefit, or the return of an accelerated death benefit rider or endorsement, shall void the life insurance policy, certificate, rider, or endorsement from the beginning, and the parties shall be in the same position as if no policy, certificate, rider, or endorsement had been issued. All premiums paid and any policy fee paid for the accelerated death benefit shall be fully refunded directly to the applicant by the insurer within 30 days after the policy, rider, endorsement, or certificate is returned.

(c) Policies, certificates, riders, or endorsements to which this section applies shall have a notice prominently printed, or attached thereto, stating in substance the conditions described in subdivisions (a) and (b).

article: 2.1. Accelerated Death Benefits


text:
(a) Application forms for accelerated death benefits shall include a question designed to elicit information as to whether the accelerated death benefit is intended to replace any long-term care insurance presently in force. A supplementary application or other form to be signed by the applicant containing that question may be used.

(b) (1) An insurer, broker, agent, or other person shall not cause a policyholder to replace a long-term care insurance policy unnecessarily. This section shall not be construed to allow an insurer, broker, agent, or other person to cause a policyholder to replace a long-term care insurance policy or life insurance policy subject to this section that will result in a decrease in benefits and an increase in premium.

(2) It shall be presumed that any third or greater policy sold to a policyholder in any 12-month period is unnecessary within the meaning of this section. This section shall not apply to those instances in which a policy is replaced solely for the purpose of consolidating policies with a single insurer.

(c) Upon determining that a sale will involve a replacement of a life insurance policy subject to this section or replacement of a long-term care insurance policy, an insurer or its agent shall furnish the applicant, prior to issuance or delivery of a policy, certificate, rider, or endorsement, a notice regarding replacement of life insurance that includes an accelerated death benefit, or long-term care insurance coverage with a life insurance policy or certificate that contains an accelerated death benefit. One copy of this notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. The required notice shall be provided in the following form:

“NOTICE TO APPLICANT REGARDING REPLACEMENT OF LONG-TERM CARE INSURANCE OR LIFE INSURANCE INCLUDING ACCELERATED DEATH BENEFITS

According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing life insurance or long-term care insurance and replace it with a life insurance policy with an accelerated death benefit to be issued by (company name) Insurance Company. Your new accelerated death benefit coverage provides 30 days within which you may decide, without cost, whether you desire to keep the coverage. Please note that your underlying life insurance policy may only provide for a 10-day period during which you may decide, without cost, whether you will keep the coverage. For your own information and protection, you should be aware of, and seriously consider, certain factors that may affect the insurance protection available to you under the new coverage.

This accelerated death benefit is NOT Nursing Home, Home Care, or Long-Term Care Insurance, and it is not intended or designed to eliminate your need for that coverage. There are no restrictions or limitations on the use of the accelerated death benefit proceeds.

If you want long-term care insurance, you should consult with an insurance agent licensed to sell that insurance, inquire with the insurance company offering the accelerated death benefits, or visit the California Department of Insurance Internet Web site (www.insurance.ca.gov) that provides information regarding long-term care insurance.

If you want to replace existing coverage with life insurance that includes an accelerated death benefit, you should note the following:

(1) Receipt of accelerated death benefits may be taxable. Prior to electing to buy the accelerated death benefit, policyholders or certificate holders should seek assistance from a qualified tax adviser.

(2) Receipt of accelerated death benefits may affect eligibility for public assistance programs, such as Medi-Cal or Medicaid. Prior to electing to buy the accelerated death benefit, the applicant/buyer should consult with the appropriate social services agency concerning how receipt of accelerated death benefits may affect that eligibility.

You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present coverage. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

If, after due consideration, you still wish to terminate your present coverage and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your coverage had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all the information has been properly recorded.

The above “Notice to Applicant” was delivered to me on:

(Date)

(Applicant’s Signature)”

(d) The replacement notice shall include the following statement except when the replacement coverage is group insurance:

“COMPARISON TO YOUR CURRENT COVERAGE: I have reviewed your current coverage. To the best of my knowledge, the replacement of insurance involved in this transaction materially improves your position for the following reasons:

____ Additional or different benefits

(please specify) ______.

____ No change in benefits, but lower premiums.

____ Fewer benefits and lower premiums.

____ Other (please specify) ______.

(Signature of Agent and Name of Insurer)

(Signature of Applicant)

(Date)

(e) In recommending the purchase or replacement of any policy or certificate issued under this section, an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

(f) The replacing policy or certificate shall not contain a provision establishing a new waiting period in the event existing coverage is converted to, or replaced by, a new or other form within the same insurer, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder.

article: 2.1. Accelerated Death Benefits


text:
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.

article: 2.1. Accelerated Death Benefits


text:
(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).”

An 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.

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

article: 2.1. Accelerated Death Benefits


text:
(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.

article: 2.1. Accelerated Death Benefits


text:
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.

article: 2.1. Accelerated Death Benefits


text:
(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.

article: 2.1. Accelerated Death Benefits


text:
(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.

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

article: 2.1. Accelerated Death Benefits


text: 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.

article: 2.1. Accelerated Death Benefits


text: 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.

article: 2.1. Accelerated Death Benefits


text: 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.

article: 2.1. Accelerated Death Benefits


text: 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.

article: 2.1. Accelerated Death Benefits


text:
No policy of accident and sickness insurance shall be delivered or issued for delivery to any person in this state unless all of the following apply:

(a) The entire money and other considerations therefor are expressed therein.

(b) The time at which the insurance takes effect and terminates is expressed therein.

(c) It purports to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of the head of a family who shall be deemed the policyholder, any two or more eligible members of that family, including spouse, dependent children, or any children under a specified age which shall not exceed 19 years of age and any other person dependent upon the policyholder.

(d) The style, arrangement and over-all appearance of the policy give no undue prominence to any portion of the text, and unless every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in light-faced type of a style in general use, the size of which shall be uniform and not less than 10-point with a lower case unspaced alphabet length not less than 120-point (the “text” shall include all printed matter except the name and address of the insurer, name or title of the policy, the brief description, if any, and captions and subcaptions).

(e) The exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in Article 4a or 5a of this chapter, are printed, at the insurer’s option, either included with the benefit provision to which they apply, or under an appropriate caption such as “Exceptions,” or “Exceptions and Reductions”; provided, that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies.

(f) Each such form, including riders and endorsements, shall be identified by a form number in the lower left-hand corner of the first page thereof.

(g) It contains no provision purporting to make any portion of the charter, rules, constitution, or bylaws of the insurer a part of the policy unless such portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks, or short-rate table filed with the commissioner.

(h) If the policy contains amendment, change, limitation, alteration, or restriction of the printed text by endorsement, or by any means other than rider upon a separate piece of paper made a part of such policy.

(i) If any portion of such policy purports to reduce benefits by reason of age of the insured and such reduction, in accordance with the age of the insured as stated in his or her application, would be effective on the issue date of the policy.

history: (History: Amended by Stats. 2016, Ch. 50, Sec. 59. (SB 1005) Effective January 1, 2017.)

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 3. Policy Form Generally—Uniform Provisions


text: After issuance a disability policy shall not be amended, changed, limited, altered, or restricted by any means other than rider upon a separate piece of paper.

history: (History: Added by Stats. 1951, Ch. 570.)

article: 3. Policy Form Generally—Uniform Provisions


text: If any disability policy is issued by an insurer domiciled in this State for delivery to a person residing in another state, and if the official having responsibility for the administration of the insurance laws of such other state shall have advised the commissioner that any such policy is not subject to approval or disapproval by such official, the commissioner may by ruling require that such policy meet the standards set forth in Section 10320 and in Articles 4a and 5a of this chapter.


text: If any provision set forth in Article 4a or 5a of this chapter is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the insurer, with the approval of the commissioner, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.


text: The provisions which are the subject of Article 4a or 5a of this chapter or any corresponding provisions which are used in lieu thereof in accordance with such articles, shall be printed in the consecutive order of the provisions in such articles or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions with which it may be logically related, providing the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued.


text: The word “insured,” as used in this chapter, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits and rights provided therein.


text: Any disability policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this State, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this chapter and which is prescribed or required by the law of the state under which the insurer is organized.


text: Any disability policy of a domestic insurer may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country.


text: The commissioner may make such reasonable rules and regulations concerning the procedure for the filing or submission of policies subject to this chapter as are necessary, proper or advisable to its administration. This provision shall not abridge any other authority granted the commissioner by law.


text: No policy provision which is not subject to Article 4a or 5a of this chapter shall make a policy or any portion thereof less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to such articles.


text: Except as provided in Section 10323, each disability policy delivered or issued for delivery to any person in this State shall contain the provisions specified in Sections 10350.1 to 10350.12, inclusive, in the words in which the same appear in such sections; provided, however, that the insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the commissioner which are in each instance not less favorable in any respect to the insured or the beneficiary. Such provisions shall be preceded individually by the caption appearing in each section or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve.

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 4. Compulsory Standard Provisions—Uniform Provisions


text:
A disability policy shall contain a provision which shall be in the form set forth herein.

Entire Contract; Changes: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions.

article: 4. Compulsory Standard Provisions—Uniform Provisions


text:
A disability policy shall contain a provision that shall be in one of the two forms set forth in this section. Policies other than noncancellable policies shall use Form A. Noncancellable policies shall use either Form A or Form B. In Form B, the clause in parentheses in paragraph (a) may be omitted at the insurer’s option. Paragraph (a) in Form A shall not be so construed as to affect any legal requirement for avoidance of a policy or denial of a claim during the initial two-year period, nor to limit the application of Sections 10369.2 to 10369.6, inclusive, in the event of misstatement with respect to age or occupation or other insurance.

Form A.

Time Limit on Certain Defenses:(a) After two years from the date of issue of this policy, no misstatements, except fraudulent misstatements, made by the applicant in the application for the policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of the two-year period.

(b) No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.

Form B.

Incontestable:(a) After this policy has been in force for a period of two years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application.

(b) No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 470. Effective January 1, 2007.)


text:
A disability policy shall contain a provision which shall be in one of the two forms set forth herein. Form A shall be used in a policy in which the insurer does not reserve the right to refuse any renewal. Form B shall be used in a policy in which an insurer reserves the right to refuse any renewal. The clause in parentheses may only be added if the policy contains a cancellation provision. In the blank in each such form shall be inserted a number; not less than “7” for weekly premium policies, “10” for monthly premium policies, and “31” for all other policies.

Form A.

Grace Period: A grace period of __ days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force (subject to the right of the insurer to cancel in accordance with the cancellation provision hereof).

Form B.

Grace Period: Unless not less than five days prior to the premium due date the insurer has delivered to the insured or has mailed to his last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted, a grace period of __ days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force (subject to the right of the insurer to cancel in accordance with the cancellation provision hereof).


text:
A disability policy shall contain a provision which shall be in the form set forth herein. The last sentence of such provision may be omitted from a noncancellable policy.

Reinstatement: If any renewal premium be not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided, however, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the forty-fifth day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than 10 days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement.


text:
A disability policy shall contain a provision which shall be in one of the two forms set forth herein. Form A may be used in any policy. Form B may be used by an insurer, at its option, in a policy providing a loss of time benefit which may be payable for at least two years. In the blank space of such provision shall be inserted the location of such office or offices as the insurer may designate for the purpose of giving notice of claim.

Form A.

Notice of Claim: Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at ____, or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer.

Form B.

Notice of Claim: Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, he shall, at least once in every six months after having given notice of claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured’s right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is actually given. Notice given by or on behalf of the insured or the beneficiary to the insurer at ____, or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer.


text:
A disability policy shall contain a provision which shall be in the form set forth herein.

Claim Forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.


text:
A disability policy shall contain a provision which shall be in the form set forth herein.

Proofs of Loss: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.


text:
A disability policy shall contain a provision which shall be in the form set forth herein. In the blank of such provision will be inserted the period for payment which must not be less frequently than monthly.

Time of Payment of Claim: Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid ____ and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof.


text:
A disability policy shall contain a provision which shall include the following first paragraph and which may, at the option of the insurer, include either or both of the following second and third paragraphs. If the provision contains the second paragraph, there shall be inserted in the blank an amount which shall not exceed one thousand dollars ($1,000).

Payment of Claims: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured’s death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured.

If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $____, to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment.

Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer’s option and unless the insured requests otherwise in writing not later than the time of filing proofs of that loss, be paid directly to the person or persons having paid for the hospitalization or medical or surgical aid, or to the hospital or person rendering those services; but it is not required that the service be rendered by a particular hospital or person.

history: (History: Amended by Stats. 1993, Ch. 744, Sec. 2.6. Effective January 1, 1994.)


text:
A disability policy shall contain a provision which shall be in the form set forth herein.

Physical Examinations and Autopsy: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law.


text:
A disability policy shall contain a provision which shall be in the form set forth herein.

Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished.


text:
A disability policy shall contain a provision which shall be in the form set forth herein. At the insurer’s option, the clause of such provision which precedes the first comma may be omitted.

Change of Beneficiary: Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy.


text:
Each policy of disability insurance issued or renewed on or after the effective date of this section, shall provide, where feasible, that benefits for confinement in an extended care facility, as defined in subsection (j) of Section 1395x of Title 42 of the United States Code, may be provided under such terms and conditions as may be agreed upon between the insured, or group policyholder, and the insurer.

Nothing in this section shall preclude a disability insurance policy from providing benefits for confinement in institutions other than extended care facilities as defined in this section.

history: (History: Added by Stats. 1972, Ch. 522.)


text:
(a) Every policy of disability insurance issued, amended, or renewed on or after January 1, 1992, that offers coverage for perinatal services shall contain a provision providing for direct reimbursement to certified nurse-midwives and nurse practitioners for perinatal services. The certified nurse-midwife or nurse practitioner may collect payment for any unpaid portion of his or her fee, as provided for under the plan for other providers.

(b) For purposes of this section, “direct reimbursement” means that after the enrollee files a claim for the perinatal service provided by the certified nurse-midwife or nurse practitioner, the plan pays the certified nurse-midwife or nurse practitioner directly.

history: (History: Added by Stats. 1991, Ch. 870, Sec. 4.)


text:
(a) (1) Every policy of disability insurance issued, amended, or renewed on or after January 1, 1994, that offers coverage for perinatal services shall contain a provision for direct reimbursement to licensed midwives for perinatal services rendered under terms and conditions as may be agreed upon between the policyholder and the insurer.

(2) The licensed midwife may collect payment for any unpaid portion of his or her fee, as provided under the policy for other providers.

(3) Reasonable consideration shall be given to licensed midwives by disability insurers contracting for services at alternative rates. For the purposes of this section, “reasonable consideration” shall have the meaning provided in Section 10180.

(b) For purposes of this section, “direct reimbursement” means that after the policyholder files a claim for the perinatal service provided under those terms and conditions as may be agreed upon between the policyholder and the insurer, the insurer pays the licensed midwife directly.

history: (History: Added by Stats. 1993, Ch. 1280, Sec. 4. Effective January 1, 1994.)


text: Except as provided in Section 10323, no disability policy delivered or issued for delivery to any person in this State shall contain provisions respecting the matters set forth in Sections 10369.2 to 10369.12, inclusive, unless such provisions are in the words in which the same appear in such sections; provided, however, that the insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the commissioner, which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption appearing in each of such sections or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve.

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 5. Optional Standard Provisions and Special Provisions—Uniform Provisions


text:
A disability policy may contain a provision in the form set forth herein.

Change of Occupation: If the insured be injured or contract sickness after having changed his occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes his occupation to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly, and will return the excess pro-rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation.

article: 5. Optional Standard Provisions and Special Provisions—Uniform Provisions


text:
A disability policy may contain a provision in the form set forth herein.

Misstatement of Age: If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age.


text:
A disability policy may contain a provision which shall, at the option of the insurer, be in one of the two forms set forth herein. If Form A is used, there shall be inserted in the first blank the type of coverage or coverages and in the second blank the maximum limit of indemnity or indemnities.

Form A.

Other Insurance in This Insurer: If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for ____ in excess of $____, the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured or to his estate.

Form B.

Other Insurance in This Insurer: Insurance effective at any one time on the insured under a like policy or policies in this insurer is limited to the one such policy elected by the insured, his beneficiary or his estate, as the case may be, and the insurer will return all premiums paid for all other such policies.


text:
A disability policy may contain a provision in the form set forth in this section. If the provision also contains the provision set forth in Section 10369.6, there shall be added to its caption the phrase, “***expense incurred benefits.” The insurer may, at its option, include in this provision a definition of “other valid coverage,” approved as to form by the commissioner. The definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or by hospital or medical service organizations, and to any other coverage, the inclusion of which may be approved by the commissioner. In the absence of that definition, the terms shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying this policy provision with respect to any insured, any amount of benefit provided for the insured pursuant to any compulsory benefit statute, including any workers’ compensation or employers’ liability statute, whether provided by a governmental agency or otherwise, shall in all cases be deemed to be “other valid coverage” of which the insurer has had notice. In applying this provision, no third party liability coverage shall be included as “other valid coverage.”

Insurance With Other Insurers: If there is other valid coverage, not with this insurer, providing benefits for the same loss on a provision of service basis or on an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for the proportion of the loss as the amount which would otherwise have been payable under this policy plus the total of the like amounts under all the other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for the loss, and for the return of the portion of the premiums paid as shall exceed the pro-rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the “like amount” of the other coverage shall be taken as the amount which the services rendered would have cost in the absence of the coverage.

history: (History: Amended by Stats. 1988, Ch. 160, Sec. 119.)


text:
A disability policy may contain a provision in the form set forth in this section. If the provision is included in a policy which also contains the provision set forth in Section 10369.5, there shall be added to its caption the phrase, “***other benefits.” The insurer may, at its option, include in this provision a definition of “other valid coverage,” approved as to form by the commissioner. The definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the commissioner. In the absence of that definition the terms shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying this policy provision with respect to any insured, any amount of benefit provided for the insured pursuant to any compulsory benefit statute, including any workers’ compensation or employers’ liability statute, whether provided by a governmental agency or otherwise, shall in all cases be deemed to be “other valid coverage” of which the insurer has had notice. In applying this provision, no third party liability coverage shall be included as “other valid coverage.”

Insurance With Other Insurers: If there is other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for the benefits under this policy shall be for the proportion of the indemnities otherwise provided under this policy for the loss as the like indemnities of which the insurer had notice, including the indemnities under this policy, bear to the total amount of all like indemnities for the loss, and for the return of the portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined.

history: (History: Amended by Stats. 1988, Ch. 160, Sec. 120.)


text:
A noncancellable disability policy may contain a provision in the form set forth herein. The insurer may, at its option, include in this provision a definition of “valid loss of time coverage,” approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the inclusion of which may be approved by the commissioner or any combination of such coverages. In the absence of such definition such term shall not include any coverage provided for such insured pursuant to any compulsory benefit statute (including any workmen’s compensation or employers’ liability statute), or benefits provided by union welfare plans or by employer or employee benefit organizations.

Relation of Earnings to Insurance: If the total monthly amount of loss of time benefits promised for the same loss under all valid loss of time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or his average monthly earnings for the period of two years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two years as shall exceed the pro-rata amount of the premiums for the benefits actually paid hereunder; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of two hundred dollars ($200) or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time.


text:
A disability policy may contain a provision in the form set forth herein.

Unpaid Premium: Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom.


text:
A disability policy may contain a provision in the form set forth herein.

Cancellation: The insurer may cancel this policy at any time by written notice delivered to the insured, or mailed to his last address as shown by the records of the insurer, stating when, not less than five days thereafter, such cancellation shall be effective; and after the policy has been continued beyond its original term the insured may cancel this policy at any time by written notice delivered or mailed to the insurer, effective upon receipt or on such later date as may be specified in such notice. In the event of cancellation, the insurer will return promptly the unearned portion of any premium paid. If the insured cancels, the earned premium shall be computed by the use of the short-rate table last filed with the state official having supervision of insurance in the state where the insured resided when the policy was issued. If the insurer cancels, the earned premium shall be computed pro rata. Cancellation shall be without prejudice to any claim originating prior to the effective date of cancellation.


text:
A disability policy may contain a provision in the form set forth herein.

Conformity With State Statutes: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes.


text:
A disability policy may contain a provision in the form set forth herein.

Illegal Occupation: The insurer shall not be liable for any loss to which a contributing cause was the insured’s commission of or attempt to commit a felony or to which a contributing cause was the insured’s being engaged in an illegal occupation.


text:
(a) A disability policy may contain a provision in the form set forth herein.

Intoxicants and controlled substances: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any controlled substance unless administered on the advice of a physician.

(b) Subdivision (a) shall not apply to a health insurance policy.

history: (History: Amended by Stats. 2008, Ch. 630, Sec. 1. Effective January 1, 2009.)


text: The falsity of any statement in the application for any policy covered by this chapter shall not bar the right to recovery under the policy unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.

history: (History: Amended by Stats. 1993, Ch. 1209, Sec. 9. Effective January 1, 1994.)

article: 6. Interpretation of Policy

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 6. Interpretation of Policy


text:
The following shall not operate as a waiver of any of the rights of the insurer in defense of any claim arising under such disability policy:

(a) The acknowledgment by any insurer of the receipt of notice given under any policy covered by this chapter.

(b) The furnishing of forms for filing proofs of loss.

(c) The acceptance of such proofs.

(d) The investigation of any claim thereunder.

history: (History: Amended by Stats. 1951, Ch. 570.)

article: 6. Interpretation of Policy


text: The insured shall not be bound by any statement made in an application for a policy unless a copy of such application is attached to or endorsed on the policy when issued as a part thereof. If any such policy delivered or issued for delivery to any person in this State shall be reinstated or renewed, and the insured or the beneficiary or assignee of such policy shall make written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall within 15 days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request, a copy of such application. If such copy shall not be so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action or proceeding based upon or involving such policy or its reinstatement or renewal.

article: 6. Interpretation of Policy


text: No alteration of any written application for any disability policy shall be made by any person other than the applicant without his written consent except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant. The making of any other alteration without the consent of the applicant is a misdemeanor. If such alteration is made by any officer of the insurer, or by any employee of the insurer with the insurer’s knowledge or consent, such alteration is deemed to be performed by the insurer issuing the policy upon such altered application.

article: 6. Interpretation of Policy


text: If any disability policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective, and if such date falls within a period for which premium is accepted by the insurer or if the insurer accepts a premium after such date, the coverage provided by the policy will continue in force subject to any right of cancellation until the end of the period for which premium has been accepted. In the event the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective, or would have ceased prior to the acceptance of such premium or premiums, then the liability of the insurer shall be limited to the refund, upon request, of all premiums paid for the period not covered by the policy.

article: 6. Interpretation of Policy


text: No insurer issuing or providing any policy of disability insurance covering hospital, medical, or surgical expenses shall engage in the practice of postclaims underwriting. For purposes of this section, “postclaims underwriting” means the rescinding, canceling, or limiting of a policy or certificate due to the insurer’s failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the policy or certificate.

history: (History: Added by Stats. 1993, Ch. 1210, Sec. 8. Effective January 1, 1994.)

article: 6. Interpretation of Policy


text:
(a) A health insurer shall not rescind a health insurance policy, or limit any provisions of a health insurance policy, once an insured is covered under the policy unless the insurer can demonstrate that the insured has performed an act or practice constituting fraud or made an intentional misrepresentation of material fact as prohibited by the terms of the policy.

(b) If a health insurer intends to rescind a health insurance policy pursuant to subdivision (a), the insurer shall send a notice to the policyholder or insured via regular certified mail at least 30 days prior to the effective date of the rescission explaining the reasons for the intended rescission and notifying the policyholder or insured of his or her right to appeal that decision to the commissioner pursuant to subdivision (b) of Section 10273.4.

(c) Notwithstanding subdivision (a) of Section 10273.4 or any other provision of law, after 24 months following the issuance of a health insurance policy, a health insurer shall not rescind the policy for any reason, and shall not cancel the policy, limit any of the provisions of the policy, or raise premiums on the policy due to any omissions, misrepresentations, or inaccuracies in the application form, whether willful or not. Nothing in this subdivision shall be construed to alter existing law that otherwise applies to a health insurer within the first 24 months following the issuance of a health insurance policy.

history: (History: Amended by Stats. 2010, Ch. 658, Sec. 14. (AB 2470) Effective January 1, 2011.)

article: 6. Interpretation of Policy


text: Compensation of a person or entity employed by, or contracted with, a disability insurer shall not be based on, or related in any way to, the number of policies or certificates for health insurance that the person or entity has caused or recommended to be rescinded, canceled, or limited, or the resulting cost savings to the insurer. A disability insurer shall not set performance goals or quotas, or provide compensation to any person or entity employed by, or contracted with, the insurer, based on the number of persons whose health insurance coverage is rescinded or any financial savings to the insurer associated with rescission of coverage.

history: (History: Added by Stats. 2008, Ch. 188, Sec. 2. Effective January 1, 2009.)

article: 6. Interpretation of Policy


text: A policy delivered or issued for delivery to any person in this State in violation of this chapter shall be held valid but shall be construed as provided in this chapter. When any provision in such a policy is in conflict with any provision of this chapter, the rights, duties and obligations of the insurer, the insured and the beneficiary shall be governed by this chapter.

article: 6. Interpretation of Policy


text: The provisions of Sections 800, 801, 802, 803, and 804 shall not apply to disability insurance.

history: (History: Amended by Stats. 1980, Ch. 676, Sec. 198.)

article: 7. Exemption

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 7. Exemption


text: Any person willfully violating any provision of this chapter or order of the commissioner made in accordance therewith shall forfeit to the people of this state a sum not to exceed one hundred eighteen dollars ($118) for each such violation, which sum may be recovered by civil action. The commissioner may also suspend or revoke the license of an insurer or agent for any such willful violation.

history: (History: Amended by Stats. 1985, Ch. 770, Sec. 16.3.)

article: 8. Penalties

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4. Standard Provisions in Disability Policies > 8. Penalties


text:
Any incorporated insurer admitted for disability insurance and any agent of such insurer, that makes or permits any discrimination between insureds of the same class in any manner whatsoever with relation to such insurance, is guilty of a misdemeanor.

The payment to insureds by an insurer of alternative rates of payment negotiated and contracted for with institutional providers shall not constitute a violation of this section.

On and after July 1, 1983, the amendments made to this section during the 1982 portion of the 1981–82 Regular Session, shall also be applicable with respect to both professional and institutional providers.

history: (History: Amended by Stats. 1982, Ch. 329, Sec. 8.5.)

article: 8. Penalties


text:
Any person who, without the prior authorization of an insurer or plan solicits a provider to enter into a contract for alternative rates under Section 10133 or 11512 of this code on behalf of such insurer or plan shall be guilty of a misdemeanor.

An insurer or plan which contracts for, or authorizes another person to, solicit or contract for alternative rates with providers on its behalf other than in the name of such insurer or plan shall be guilty of a misdemeanor.

history: (History: Added by Stats. 1982, Ch. 1594, Sec. 12. Effective September 30, 1982. Operative January 1, 1983, by Sec. 82 of Ch. 1594.)

article: 8. Penalties


text: An insurer or plan which accepts or ratifies a contract for alternative rates known by it to have been executed by a provider prior to the insurer’s or plan’s authorization, in reliance on the representation that it was authorized by such insurer or plan, shall be guilty of a misdemeanor.

history: (History: Added by Stats. 1982, Ch. 1594, Sec. 13. Effective September 30, 1982. Operative January 1, 1983, by Sec. 82 of Ch. 1594.)

article: 8. Penalties


text: A health insurer that is subject to the requirements of Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107 of the Health and Safety Code and that fails to comply with the data submission requirements of that chapter is subject to a civil penalty not to exceed five thousand dollars ($5,000) for each 30-day period in which the insurer fails to comply. If the failure to comply is willful, the insurer is subject to a civil penalty not to exceed ten thousand dollars ($10,000) for each 30-day period in which the person fails to comply. The aggregate penalty for each instance of noncompliance shall not exceed one hundred thousand dollars ($100,000). In determining the penalty, the commissioner shall consider the good faith of the insurer and any similar prior violations by the insurer.

history: (History: Added by Stats. 2020, Ch. 12, Sec. 35. (AB 80) Effective June 29, 2020.)

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 4.1. General Regulation of Health Insurers


text: An admitted life insurer shall not issue or deliver in this State, any securities or any special or advisory board or other contracts of any kind promising returns and profits as an inducement to insurance nor shall it permit its agents, officers or employees to do so.

history: (History: Enacted by Stats. 1935, Ch. 145.)

chapter: 5. General Regulation of Life Insurers

article: 1. Restrictions on Business

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 5. General Regulation of Life Insurers > 1. Restrictions on Business


text: A life insurer which, as an inducement to insurance, issues or permits its agents, officers, or employees to issue any such securities or contracts in this State or any other State shall not be admitted.

article: 1. Restrictions on Business


text: A corporation or stock company, acting as agent of a life insurer and its agents, officers, or employees shall not sell, agree or offer to sell, or give or offer to give, directly or indirectly, any such securities or contracts as an inducement to insurance or in connection therewith.

article: 1. Restrictions on Business


text: Upon proof, after notice and hearing, that any such insurer or agent has violated any of the provisions of sections 10430, 10431, or 10432, the commissioner shall revoke the certificate of authority or license of the insurer or agent so offending.

article: 1. Restrictions on Business


text:
(a) An admitted life insurer shall not pay or contract to pay, directly or indirectly, to any of the parties specified in subdivision (b) any commission or other compensation contingent upon any of the following acts:

(1) The writing or procuring of any policy of life, disability or both classes of insurance issued by the insurer.

(2) Procuring an application therefor by any person.

(3) The payment of any renewal premium or the assumption of any life, disability or both of these classes of insurance by the insurer.

(b) It shall not pay this compensation to:

(1) Its president.

(2) Its vice president.

(3) Its secretary.

(4) Its treasurer.

(5) Its actuary.

(6) Its medical director or other physician charged with the duty of examining risks or applications for any of these classes of insurance.

(7) Any member of its board of directors, except when that compensation to be paid to the director would be less than the lesser of 1 percent of the insurer’s statutory net gain from operations or 1 percent of commissions on premiums and annuity considerations for the preceding calendar year. This exception shall not apply when more than two of the members of the board of directors of the insurer, when the total number of board members is more than 10, or more than one of the members of the board of directors of the insurer, when the total number of board members is less than 10, would receive that compensation, nor shall this exception apply to any director who has served more than two years as a director. Any director receiving compensation pursuant to this paragraph shall be ineligible to vote on all matters directly relating to that compensation and shall not be counted for purposes of a quorum as to those matters.

(8) Any officer of the insurer other than its agent or solicitor.

(c) Nothing in this article shall prevent the payment of compensation to an officer of the insurer based upon the aggregate amounts of insurance issued by the insurer, or issued and in force, during any specified period if the officer is not directly responsible for recommending, underwriting, rating, or otherwise approving the acceptability of insurance risks.

history: (History: Amended by Stats. 1986, Ch. 1139, Sec. 1.)

article: 1. Restrictions on Business


text: Whenever any insurer violates Section 10434, the commissioner may revoke its certificate of authority or refuse to issue a certificate of authority to that insurer.

history: (History: Amended by Stats. 1986, Ch. 1139, Sec. 2.)

article: 1. Restrictions on Business


text: An admitted life insurer may issue a rider to a policy of life insurance for the purpose of providing coverage for long-term care, if the rider has been reviewed and approved, in a manner similar to that of other long-term care insurance products, by the commissioner.

history: (History: Added by Stats. 1988, Ch. 1015, Sec. 1.)

article: 1. Restrictions on Business


text: In any meeting of members of a domestic mutual insurer writing classes of insurance which include life or disability insurance, the presence in person or by proxy or written vote of 5 percent of the members entitled to vote shall constitute a quorum for the transaction of business unless a higher percentage is required by this code or by the by-laws or articles of incorporation of the insurer.

history: (History: Added by Stats. 1957, Ch. 425.)

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 5. General Regulation of Life Insurers > 1a. Regulation of Internal Affairs of Mutual Insurers


text: The provisions of Section 10440 shall not apply to any of the transactions, meetings, or votes described in Sections 1001, 1103, and 1900 of the Corporations Code.

history: (History: Amended by Stats. 1978, Ch. 349.)

article: 1a. Regulation of Internal Affairs of Mutual Insurers


text:
Except as otherwise provided in this article or in the other provisions of this code, the internal affairs of every domestic mutual insurer writing classes of insurance which include life or disability insurance shall be governed by Division 1 of Title 1 of the Corporations Code.

For the purpose of applying the provisions of Division 1 of Title 1 of the Corporations Code, the provisions thereof referring to shareholders or members shall be applied as though such provisions referred to the policyholders or members of a mutual insurer.


text: Any insurer transacting life insurance in this State on September 30, 1939, may register its policies with the commissioner in the manner and subject to the restrictions set forth in this article.

history: (History: Amended by Stats. 1939, Ch. 933.)

article: 2. Registration of Life Policies

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 5. General Regulation of Life Insurers > 2. Registration of Life Policies


text: An insurer which is not registering its policies pursuant to the provisions of this article on September 30, 1939, shall not thereafter be permitted to register its policies.

history: (History: Added by Stats. 1939, Ch. 933.)

article: 2. Registration of Life Policies


text: Any insurer registering its policies pursuant to this article on June 30, 1939, which fails prior to September 1, 1941, to file with the commissioner an election to cease such registration on or before December 31, 1941, shall thereafter continue to register all life policies issued by it. Whenever it fails to continue such registration thereafter, the commissioner shall revoke its certificate of authority, and its condition shall thereupon conclusively be deemed to be such that its further transaction of business will be hazardous to its policyholders, or creditors, or to the public, within the meaning of subdivision (d) of section 1011 of this code.

article: 2. Registration of Life Policies


text: When an insurer elects to register any of its policies, it shall register every policy thereafter issued by it until it discontinues registration.

article: 2. Registration of Life Policies


text: Such registration shall in each case show the name and age of the insured, number and date of the policy and the kind and amount of insurance.

article: 2. Registration of Life Policies


text: An insurer registering policies shall maintain a special deposit of securities with the commissioner for the benefit of such registered policies. Such securities shall be of the character specified in Articles 3, 4 and 6 of Chapter 2, Part 2, Division 1, or specified in sections 10459 and 10460.

article: 2. Registration of Life Policies


text: The commissioner shall give his receipt for the securities and the State shall be responsible for the custody and safe return of any securities so deposited.

article: 2. Registration of Life Policies


text: Such deposit shall be maintained in an amount equal to the full net value of all policies registered up to the time of making the deposit, less the amount loaned on such registered policies.

article: 2. Registration of Life Policies


text: Upon receipt of such securities, the commissioner shall immediately deposit them in the State Treasury in accordance with the provisions of Sections 940 to 946, inclusive, where they shall remain as a special security for the benefit of such registered policies.

history: (History: Amended by Stats. 1980, Ch. 676, Sec. 199.)

article: 2. Registration of Life Policies


text: Such insurer may at any time withdraw any excess of such securities above the required amount upon satisfying the commissioner by written proof that such excess exists. It may receive the interest on all securities deposited, and exchange such securities by substituting other securities of the required character.

article: 2. Registration of Life Policies


text: If such insurer owns the building in which it has its principal office and the land upon which it stands, or if it owns other real property located in this State and requisite for its accommodation in the convenient transaction of its business, it may, with the permission of the commissioner, mortgage such property to the commissioner for such sum, not exceeding the market value thereof, as he determines.

article: 2. Registration of Life Policies


text: Such mortgage may be deposited in the State treasury as part of the securities required by this article. Such mortgage is withdrawable in like manner with other securities in the deposit. The commissioner shall require the mortgage to be recorded before acceptance for deposit.

article: 2. Registration of Life Policies


text: The commissioner may release any such mortgage or may foreclose it in case such foreclosure becomes necessary.

article: 2. Registration of Life Policies


text: Should any insurer thus registering policies become insolvent, the commissioner may reinsure all or any part of such registered policies, using the securities thus deposited for that purpose.

article: 2. Registration of Life Policies


text: The commissioner shall require in advance, in lawful money of the United States, as a fee for registering each policy as provided by this article, twenty-five cents.

article: 2. Registration of Life Policies


text: This article is applicable only to policies and contracts issued prior to the operative date as to such policies or contracts of Article 3a, Chapter 1, Part 2, Division 2.

history: (History: Added by Stats. 1943, Ch. 955.)

article: 3. Valuation of Life Policies

path: 2. CLASSES OF INSURANCE > 2. LIFE AND DISABILITY INSURANCE > 5. General Regulation of Life Insurers > 3. Valuation of Life Policies


text: The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every admitted life insurer, except that in the case of an alien insurer such valuation shall be limited to its insurance transactions in the United States, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods (net level premium method or other) used in the calculation of such reserves. In calculating such reserves, he or she may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien insurer, he or she may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard herein provided and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.

history: (History: Amended by Stats. 1991, Ch. 1005, Sec. 1.)

article: 3. Valuation of Life Policies


text: When the commissioner has valued the reserve liabilities of an insurer as provided by this article, he or she may upon request of the insurer issue his or her official certificate or certificates describing the reserve liability and the valuation thereof as he or she has determined. For issuing an original certificate, the commissioner shall require, in advance, a fee of forty-seven dollars ($47), plus the actual cost to the department of making the valuation on which the certificate is based including, but not limited to, the aggregate salaries computed on an hourly basis for the time actually spent thereon by all of the department personnel.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 60. (AB 1699) Effective January 1, 2018.)

article: 3. Valuation of Life Policies


text: On or before the first day of March of each year every domestic incorporated life insurer shall furnish the commissioner the necessary data for determining the valuation of all its policies outstanding on the last preceding thirty-first of December.

history: (History: Amended by Stats. 1991, Ch. 1005, Sec. 3.)

article: 3. Valuation of Life Policies


text: Every admitted foreign life insurer shall, upon the written demand of the commissioner, furnish him or her, at such time as he designates, the requisite data for determining the valuation of all its policies then outstanding.

history: (History: Amended by Stats. 1991, Ch. 1005, Sec. 4.)

article: 3. Valuation of Life Policies


text: Except as provided in Sections 10484 and 10485, and except as provided in Section 10489.7 for benefits purchased under group annuity and pure endowment contracts subject to this article, valuations of life policies must be based on the standards set forth in Section 986.

history: (History: Amended by Stats. 1973, Ch. 456.)

article: 3. Valuation of Life Policies


text: When the laws of any other State require a valuation of the outstanding policies of a domestic life insurer by any standard of valuation different from that named in this article, the commissioner may make such valuation for use in such other State, and issue his certificate in accordance therewith.

article: 3. Valuation of Life Policies


text: In the case of insurance issued by a domestic insurer authorized to do business in a foreign country upon the lives of residents of that country, the commissioner may vary the mortality standard to a standard applicable to that country.

article: 3. Valuation of Life Policies


text: Any life insurer issuing policies of group life insurance may value such policies on any accepted table of mortality with interest assumption adopted by the insurer for that purpose if such standard is not lower than the American Men Ultimate Table of Mortality with interest assumption at three and one-half per cent per annum.

article: 3. Valuation of Life Policies


text: All policies of group insurance shall be segregated by the insurer into a separate class and the mortality experience kept separate. The number of policies, amount of insurance, reserves, premiums and payments to policyholders thereunder, together with the mortality table and interest assumption adopted by the insurer, shall be reported separately in its annual financial statement.

article: 3. Valuation of Life Policies


text:
(a) As prescribed in subdivision (b), an insurer may maintain reserves on a one year preliminary term basis on a life, term or endowment policy if by its terms such policy expressly provides that the first year’s insurance under such policy is term insurance purchased by part or the whole of the premium to be received during the first year.

(b) If the actuarial net preliminary term renewal premium in the case of(1) insurance under a limited-payment life preliminary term policy providing for the payment of all premiums thereon within less than 20 years from the date thereof; or(2) endowment insurance under an endowment preliminary term policy, exceeds the actuarial net preliminary term renewal premium, calculated on the same table of mortality and rate of interest, for a 20-payment life policy, the reserve on such policy specified under (1) or (2) of this subdivision (b), as the case may be, at the end of any year, including the first, shall not be less than the sum of the reserve on a 20-payment life preliminary term policy issued at the same time on a life of the same age, and the actuarial net level premium reserve for a pure endowment maturing at the end of the premium payment period, equal to the excess of the full net level premium reserve, at the end of such premium payment period, on such policy specified under (1) or (2) of this subdivision (b), as the case may be, over the reserve, at the end of such premium payment period, of such 20-payment life preliminary term policy.

The premium payment period herein referred to is 20 years or the period, if less, during which premiums are actually payable under such policy specified in (1) or (2) of this subdivision (b), as the case may be.

(c) As used in this section, the term “20-payment life preliminary term policy” means a life insurance policy embodying all of the following attributes:

(1) It is whole-life insurance;

(2) The premium charged is payable annually or at lesser intervals until 20 annual premiums or a proportionately greater number of premiums payable at intervals less than one year shall have been paid, or until the prior death of the insured;

(3) The first year’s insurance is term insurance purchased by the whole or part of the premium to be received during the first contract year.

history: (History: Added by Stats. 1941, Ch. 277.)

article: 3. Valuation of Life Policies


text: Reserves for all policies and contracts to which this article applies may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this article.

article: 3. Valuation of Life Policies


text: Any insurer which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this article or Article 3a of this chapter may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum therein provided.

article: 3. Valuation of Life Policies


text:
(a) This article shall be known as the Standard Valuation Law.

(b) For the purposes of this article, the following definitions shall apply:

(1) “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.

(2) “Company” means an entity that (A) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at least one policy in force or on claim or (B) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state.

(3) “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual.

(4) “Life insurance” means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.

(5) “NAIC” means the National Association of Insurance Commissioners.

(6) “Principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with Section 10489.97, as specified in the valuation manual.

(7) “Valuation manual” means the manual of valuation instructions adopted by the NAIC as specified in this article or as subsequently amended.

(c) For the purposes of this article, the following definitions shall apply on and after the operative date of the valuation manual:

(1) “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subdivision (b) of Section 10489.15.

(2) “Policyholder behavior” means any action a policyholder, contractholder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this article, including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.

(3) “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing those statements and who meets the requirements specified in the valuation manual.

(4) “Tail risk” means a risk that occurs either when the frequency of low probability events is higher than expected under a normal probability distribution or when there are observed events of very significant size or magnitude.

(d) This article and Sections 10480, 10481, 10483, 10484, and 10486 shall apply (1) to the valuation of policies and contracts subject to this article issued on or after the operative date of the valuation manual and (2) as provided in Section 10489.3 as to the valuation of benefits purchased under group annuity and pure endowment contracts issued prior to that operative date.

history: (History: Repealed and added by Stats. 2015, Ch. 658, Sec. 4. (SB 696) Effective January 1, 2016.)

article: 3a. Standard Valuation Law

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