Permitted compensation arrangements.

(a) An insurer or other entity may provide commission or other compensation to a producer for the sale of a long-term care insurance policy or certificate only if the first year commission or other compensation is not greater than 50% of the first year premium.

(b) The commission or other compensation provided for a minimum of 5 subsequent (renewal) years may not exceed 10% of the renewal premium.

(c) When there is a replacement of an existing policy or duplication of coverage, an entity may not provide compensation to its producers and a producer may not receive compensation greater than the renewal compensation payable by the replacing or duplicative insurer.

(d) For purposes of this section, ‘‘compensation’’ includes pecuniary or nonpecuniary remuneration relating to the sale or renewal of the policy or certificate, including bonuses, gifts, prizes, awards and finders fees.

(e) Subsections (a) and (b) apply solely to producers who directly solicit applicants and insureds and who effect the sale of a policy or certificate and not to general agents or other entities who contract with or are otherwise employed by insurers.

APPENDIX A

RESCISSION REPORTING FORM FOR LONG-TERM CARE POLICIES FOR THE STATE OF

FOR THE REPORTING YEAR 20[

]

Company Name:

Address:

Phone Number:

Due: March 1 annually

Instructions:

The purpose of this form is to report all rescissions of long-term care insurance policies or certificates. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.

Policy Form # Policy and Certificate # Name of Insured Date of Policy Issuance Date/s Claim/s Submitted Date of Rescission

Detailed reason for rescission:

Signature

Name and Title (please type)

Date