§ 26-18-122 — Relation of earnings to insurance

(a) "After the loss-of-time benefit of this policy has
been payable for ninety (90) days, that benefit shall be
adjusted, as provided in this section, if the total amount of
unadjusted loss-of-time benefits provided in all valid
loss-of-time coverage upon the insured exceeds .... % of the
insured's earned income. However, if the information contained
in the application discloses that the total amount of
loss-of-time benefits under this policy and under all other
valid loss-of-time coverage expected to be effective upon the
insured in accordance with the application for this policy
exceeded .... % of the insured's earned income at the time of
the application, the higher percentage shall be used in the
place of .... %. The adjusted loss-of-time benefit under this
policy for any month shall be only that proportion of the
loss-of-time benefit otherwise payable under this policy as:
(i) The product of the insured's earned income and
.... % or, if higher, the alternative percentage described at
the end of the first sentence of this provision bears to;
(ii) The total amount of loss-of-time benefits
payable for that month under this policy and all other valid
loss-of-time coverage on the insured, without giving effect to
the overinsurance provision in this or any other coverage; less
(iii) In both paragraphs (i) and (ii) of this
subsection any amount of loss-of-time benefits payable under
other valid loss-of-time coverage which does not contain an
'overinsurance provision'.
(b) In making the computation specified in subsection (a)
of this section, all benefits and earnings shall be converted to
a consistent (insert 'weekly' if the loss-of-time benefit of
this policy is payable weekly, 'monthly' if the benefit is
payable monthly, etc.) basis. If the numerator of the ratio
obtained in the computation in subsection (a) of this section is
zero or is negative, no benefit is payable under this policy.
This provision does not operate to:
(i) Reduce the total combined amount of loss-of-time
benefits for the month payable under this policy and all other
valid loss-of-time coverage below the lesser of three hundred
dollars ($300.00) and the total combined amount of loss-of-time
benefits determined without giving effect to any 'overinsurance
provision';
(ii) Increase the amount of benefits payable under
this policy above the amount which would have been paid in the
absence of this provision; nor
(iii) Take into account or reduce any benefit other
than the loss-of-time benefit.
(c) For the purpose of subsections (a) and (b) of this
section:
(i) 'Earned income', unless otherwise specified,
means the greater of the monthly earnings of the insured at the
time disability commences and his average monthly earnings for a
period of two (2) years immediately preceding the commencement
of that disability and does not include any investment income or
any other income not derived from the insured's vocational
activities;
(ii) 'Overinsurance provision' includes this
provision and any other provision with respect to any
loss-of-time coverage which may have the effect of reducing an
insurer's liability if the total amount of loss-of-time benefits
under all coverage exceeds a stated relationship to the
insured's earnings."
(d) The provisions of subsections (a) through (c) of this
section may be included only in a policy providing a
loss-of-time benefit which is payable for at least fifty-two
(52) weeks, which is issued on the basis of selective
underwriting of each individual application and for which the
application includes a question designed to elicit information
necessary either to determine the ratio of the total
loss-of-time benefits of the insured to the insured's earned
income or to determine that the ratio does not exceed the
percentage of earnings, not less than sixty percent (60%), the
insurer selects and inserts instead of the blank factor
specified in this section. As part of the proof of claim, the
insurer may require the information necessary to administer this
provision. If the application indicates that other loss-of-time
coverage is to be discontinued, the amount of the other coverage
shall be excluded in computing the alternative percentage in the
first sentence of the overinsurance provision.
(e) The policy shall include a definition of "valid
loss-of-time coverage", which the commissioner approves as to
form. The definition may include:
(i) Coverage provided by:
(A) Governmental agencies; and
(B) Organizations subject to regulation by
insurance law and by insurance authorities of this or any other
state of the United States or of any other country or
subdivision thereof.
(ii) Coverage provided for the insured pursuant to:
(A) Any disability benefits statute; or
(B) Any worker's compensation or employer's
liability statute.
(iii) Benefits provided by labor-management trusteed
plans, union welfare plans, employer or employee benefit
organizations or by salary continuance or pension programs; and
(iv) Any other coverage the inclusion of which the
commissioner approves.