New California Law to Affect Life-LTC Hybrids
October 23, 2019 by Allison Bell
The new law, based on Assembly Bill 1209, applies to life-LTC hybrids built around life insurance policies that normally offer access with policy loans or cash withdrawals, and that provide LTC benefits by accelerating payment of death benefits.
If the underlying policy normally allows for policy loans or cash withdrawals, the policy may not “prohibit or limit a loan or withdrawal while the insured receives payment of long-term care benefits, except as specified,” according to the bill text.
If, however, the payment of accelerated death benefits for use in long-term care caused the cash value of the policy to fall, the drop in the remaining cash value could affect future access to policy loans, according to the bill text.