Update: Indemnity Disclosure Requirements Overturned

Over the past 18 months, we’ve communicated about a proposed federal rule that would have significantly threatened fixed indemnity products, specifically hospital indemnity. Through successful advocacy by Unum and industry partners, the final rule was modified to eliminate the offending provisions which would have made harmful changes to the structure and taxation of our hospital indemnity products. The final rule did, however, contain a new mandated disclosure for these products.

ManhattanLife filed a lawsuit questioning the authority of the agencies to require the disclosure and a federal judge ruled in favor of the plaintiffs on December 4, 2024. Under this ruling, the new disclosure is no longer required - an important success for the industry and the millions of policyholders who value these products.

While this issue has been fully resolved, future efforts that could significantly impact these products are expected. You may recall that a similar rule was proposed and defeated in 2016. This year, the final rule's preamble stated that staff in the agencies would like to revisit changes to the structure and taxation of fixed indemnity products in the future.

There is still a small chance that the federal agencies could appeal this decision and a handful of states have issued bulletins on required disclosures. We are currently developing our plan to unwind the work that was done to implement the disclosure, which may take some time. For now, we want to spread the good news on the successful effort to eliminate this harmful rule and will keep you updated on any future impact on these products. Should you have any questions regarding state specific requirements, please reach out to Unum’s VB organization at vbproducts@unum.com.