§ 58-51-130. Standards for disability income insurance policies. - North Carolina Statutes

§58‑51‑130.  Standards for disability income insurance policies.

(a)        Definitions. – Asused in this section:

(1)        "Disabilityincome insurance policy" or "policy" means a policy of accidentand health insurance that provides payments when the insured is unable to workbecause of illness, disease, or injury.

(2)        "Policy"includes the certificates referred to in subsection (b) of this section.

(b)        Applicability. –This section applies to all policies used in this State, including certificatesissued under group policies that are used in this State. This section alsoapplies to a certificate issued under a policy issued and delivered to a trustor to an association outside of this State and covering persons residing inthis State.

(c)        DisclosureStandards. – Every disability income insurance policy shall include provisions,where applicable, addressing:

(1)        Terms ofrenewability.

(2)        Initial andsubsequent conditions of eligibility.

(3)        Nonduplication ofcoverage.

(4)        Preexistingconditions.

(5)        Probationary periods.

(6)        Elimination periods.

(7)        Requirements forreplacement.

(8)        Recurrentconditions.

(9)        Definitions ofterms.

(d)        PreexistingConditions. – If an insurer does not seek a prospective insured's medicalhistory in the application or enrollment process, the insurer shall not deny aclaim for disabilities that commence more than 24 months after the effectivedate of the insured person's coverage on the grounds the disability is causedby a preexisting condition. A policy shall not define a preexisting conditionmore restrictively than "a condition for which medical advice, diagnosis,care, or treatment was received or recommended within the 24‑month periodimmediately preceding the effective date of coverage of the insuredperson."

(e)        Exceptions. –Nothing in this section prohibits an insurer from:

(1)        Using an applicationor enrollment form designed to elicit the medical history of a prospectiveinsured.

(2)        Underwriting basedon answers on the form according to the insurer's established standards.

(3)        Contesting theanswers in accordance with G.S. 58‑51‑15(a)(2)a.

(f)         RequiredProvisions. – Each policy shall include:

(1)        A description of theprincipal benefits and coverage provided in the policy.

(2)        A statement of theexceptions, reductions, and limitations contained in the policy.

(3)        A statement of therenewal provisions, including any reservation by the insurer of a right tochange premiums.

(g)        Other ApplicableProvisions. – G.S. 58‑51‑95(f) applies to individual policies andG.S. 58‑51‑80(g) applies to group policies.

(h)        Other IncomeSources. – If a policy contains a provision that provides for integration ofbenefits with other income sources, it shall include a definition of what isconsidered other income sources and a complete description of how benefits willbe reduced by other income sources, if at all. No disability income policyshall provide that the amount of any disability benefit paid to the insuredshall be reduced by reason of any cost‑of‑living increase,designated as such under the federal Social Security Act, if the cost‑of‑livingincrease occurs during the period for which benefits are payable. (1999‑351,s. 2.)