Updated Life Insurance Application Filing Requirement Changes for Insuring Minors

BULLETIN 18-24 REPLACING BULLETIN 18-22 To: All Life Insurance Companies Re: Maryland SB 168, Chapter 431, (Acts 2018) - Life of a Minor – Underwriting Standards and Procedures - §16-119 – Effective January 1, 2019 Date: December 5, 2018 The purpose of this Bulletin is to update and replace Bulletin 18-22 which was issued on October 17, 2018 and provide further clarification on the requirements of Maryland Senate Bill 168, Chapter 431 (Acts 2018). The new Senate Bill adds Insurance Article § 16-119, Annotated Code of Maryland and will take effect on January 1, 2019. The new Statute permits a life insurer to refuse an application for a life insurance policy on the life of a Minor only if the refusal is consistent with § 27-501(A)(2) which states: “… an insurer or insurance producer may not cancel or refuse to underwrite or renew a particular insurance risk or class of risk except by the application of standards that are reasonably related to the insurer’s economic and business purposes.” For compliance with § 16-119, a life insurer shall include on the first page of the application for a policy of life insurance on the life of a minor, or on an endorsement to the policy, the following statement in 12 point bold type: “A person who feloniously and intentionally kills, conspires to kill, or procures the killing of the insured and who is a named beneficiary of a life insurance policy on the insured is not entitled to a benefit under the policy.” Insurers may file revised applications either with the Maryland Insurance Administration directly or with the Compact. The Compact issued a written advisory to provide guidance pursuant to the Individual Life Insurance Application Standards (IIPRC-L-I-APP) at https://www.insurancecompact.org/weekly_tips/compact_applications_for_child_life_insurance.htm. Please be advised that the Compact will not be checking forms filed for compliance with §16-119. AL REDMER, JR. Commissioner NANCY GRODIN Deputy Commissioner LARRY HOGAN Governor BOYD K. RUTHERFORD Lt. Governor 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202 1-800-492-6116 TTY: 1-800-735-2258 www.insurance maryland.gov An application for a policy of life insurance on the life of a minor that is submitted for underwriting shall include the signature of the applicant and unless the minor is emancipated or married, the consent and signature of the parent or legal guardian with whom the minor resides1. As part of the life insurer’s written application standards and procedures for policy acceptance, the life insurer shall: (1) Request that the applicant identifies the amount, if any, of other life insurance coverage on the life of the minor that is in force or pending at the time of the application; (2) Document the applicant’s response on the application; and (3) Take reasonable steps to verify the total amount of life insurance already in force or pending. If an application for a life insurance policy on the life of a minor is for a policy that has a benefit of $50,000 or less and is issued without underwriting, in addition to items 1, 2, and 3 above, the life insurer shall document the steps taken on a particular application to verify the total amount of life insurance in force or pending. For each application for a policy of life insurance on the life of a minor that is rejected, the life insurer must maintain at its home or principle office for at least 3 years after the date the application was signed a complete file of the original application, underwriting analysis, correspondence with the applicant, any other documents pertaining to the decision to reject the application. The insurer must also maintain all records sufficient to demonstrate that the applicant for a policy of life insurance on the life of a minor has an insurable interest in the life of the minor in accordance with § 12-201, of the Insurance Article, Annotated Code of Maryland. Questions about this Bulletin may be directed to Nour Benchaaboun, Director - Life, Credit, and Annuity Review, at 410-468-2222. AL REDMER, JR. Commissioner By: _ Robert D. Morrow, Jr. Associate Commissioner Life and Health 1 In some instances this could be the same person. signature on original