The benefit period, or length of time for which an LTC Insurance policy pays benefits, is another significant factor in the cost of a policy –– the longer the period, the greater the premium, assuming everything else is the same. Some LTCI policies offer benefit periods ranging from as little as one year to ten years or more and as long as a lifetime. Not all options are available from all insurers. A single insurer might offer more than one type of LTC Insurance policy, in which case the benefit periods available might differ for each policy type.
As a general rule, the periods are 1, 2, 3, 4, 5 years, and Lifetime. Those policies using the “Pool” concept express their benefit periods as the total amount that can be accumulated in the “Pool.” However, they usually also offer a lifetime policy, in which case there is no actual Benefit Period – the policy pays the costs of the longer-term care up to the Daily Benefit chosen. These policies, obviously, are quite expensive.
A lifetime benefit period might be referred to as "unlimited" or "unlimited lifetime" coverage.
In determining the “proper” or “recommended” benefit period, one statistic to keep in mind is that nearly 90% of all people over age 65 who enter a nursing home stay less than 5 years. Presently the average length of time for current residents is 2 ½ years. Therefore it would seem to reasonable to purchase a 3 or 4 year benefit period, preferably a 4 year policy, as that way, if nursing home care is needed for a longer time, 4 years should give the insured and family time to prepare for the financial demands of a longer stay. Still, it must be kept in mind that people are living longer so by the time that the insured would need to be admitted to a nursing home, the time that they will stay there will have increased on the average –– therefore the 4 years is preferable to the 3 year.
With the Partnership Program, the big factor is usually the maximum benefit amount as that is the amount that the policyholder can protect from Medicaid if he should happen to be in a situation where he needs to qualify for Medicaid.
Certain insurers whose policies cover nursing home care plus other types of care have different benefit periods for different care settings. For example, the insured may choose up to five years for nursing home care and two years for home health care. Some insurers establish the number of years themselves; others allow the insured to select different periods for each coverage desired. At least one policy currently differentiates the type of care received in a nursing home, with benefits paid for two, three or four years for skilled and intermediate care, but for only 60 days when care is custodial.
Other companies offer different benefit period options based on the insured's age at the time of purchase. For example, one insurer offers people age 45 to 79, periods of two, four or six years or lifetime coverage, while people who are 80 to 84 may select only one ‑ or two-year benefit periods.
Be cautious about policies that define their benefit periods as a one-time maximum period. This means the insured can receive policy benefits only one time. For example, suppose the benefit period is three years. An insured receives benefits for one year, and then recovers. If that insured should need long-term care again at a later date, there is no coverage even though it would appear two more years worth of benefits are available. Most policies, on the other hand, pay for another round of long-term care. Many policies have a restoration of benefits feature that assures benefits are available for future needs.
What is the best benefit period? Considering all of the variables that affect any given person's situation, the question is difficult to answer. Advocates often suggest three or four years to get the best combination of affordability and adequate coverage time; others recommend a six year minimum. Still another suggests each individual select the longest period he or she can realistically afford. Most people who are confined to a nursing home need care for three months or less, yet the average nursing home stay is two and one-half years. And, the average is so long because of the few who will spend the rest of their lifetimes in a nursing home or receiving custodial care at home or elsewhere. In the end, for a healthy person, it's a gamble with nature. For those who can afford to pay for some period of LTC Insurance benefits, the shortest period available is probably better than none since the cost of one year of care currently ranges from $30,000 to $70,000+.
Most policies do allow for restoration of benefits. The insured must be off-claim before benefits are restored for periods ranging from 180 days to 6 months as a rule, with most policies using the 180 days. Most policies have a maximum number of times that they can restore, usually twice.
The point to remember in discussing restoration of benefits is that the period before benefits are restored must be as indicated (180 days or 6 months usually) in the policy and the insured must have been treatment-free before the claim or the new claim is for a different cause completely. This can be best explained by example: The insured had a hip replacement and as a result, he was eligible for 45 days of benefits. Eight months later he reinjured his hip while working on a home project and went back into the hospital, with several weeks of physical therapy later. He filed for new benefits, however it was discovered that since his hip surgery he had been taking prescription anti-inflammatories for the pain in his hip. Therefore he did not qualify for restoration of benefits as he had continued his treatment for the previous injury.
It helps to remember that this provision is required in many states because it was devised to protect elderly insurers who may have forgotten to pay the premium on time. The insured is still required to pay any back premiums if premiums are in default.
Each insurer offering long-term care insurance must, as a protection against unintentional lapse, comply with the following:
No individual long-term care policy or certificate will be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation must not constitute acceptance of any liability on the third party for services provided to the insured.
The form used for the written designation must provide space clearly designated for listing at least one person. The designation must include each person’s full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver must state:“
”Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until thirty (30) days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice.”
The insurer must notify the insured of the right to change this written designation, no less often than once every two (2) years.
When the policyholder or certificate holder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements need not be met until sixty (60) days after the policyholder or certificate holder is no longer on such a payment plan. The application or enrollment form for such policies or certificates must clearly indicate the payment plan selected by the applicant.
No individual long-term care policy or certificate must lapse or be terminated for nonpayment of premium unless the insurer, at least thirty (30) days before the effective date of the lapse or termination, has given notice to the insured and to those persons so designated at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice must be given by first class United States mail, postage prepaid; and notice may not be given until thirty (30) days after a premium is due and unpaid. Notice must be deemed to have been given as of five (5) days after the date of mailing.
In addition to these requirements, a long-term care insurance policy or certificate must include a provision that provides for reinstatement of coverage, in the event of lapse if the insurer is provided proof that the policyholder or certificate holder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired. This option will be available to the insured if requested within five (5) months after termination and will allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity may not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.
Evidence of insurability will not be required; however the insured must pay all back premiums from the date of default and may be required to provide supporting documentation as to their physical or mental conditions at time of lapse.
Long-term care policies frequently include a limitation on the payment of benefits for pre‑existing conditions—medical conditions the insured was treated for or knew about before the effective date of the policy. In some policies, a separate provision addresses pre‑existing conditions; in others, they are treated as an exclusion. This topic will be discussed separately from exclusions since pre‑existing conditions, though often excluded from early coverage, are usually covered after some period of time. Pre‑existing conditions, then, more accurately represent a situation that is subject to a policy limitation rather than a complete exclusion.
Delaware regulations state:
“No long-term care insurance policy or certificate, other than a policy or certificate there under issued to a group (as defined in the regulations), must use a definition of "preexisting condition" which is more restrictive than the following: ‘Preexisting condition’ must mean a condition for which medical advice or treatment was recommended by, or received from a provider of health care services, within 6 months preceding the effective date of coverage of an insured person.”93
No long-term care insurance policy or certificate, other than a policy or certificate thereunder issued to a group shall exclude coverage for a loss or confinement which is the result of a preexisting condition, unless such loss or confinement begins within 6 months following the effective date of coverage of an insured person. These requirements are commonly known as the 6/6 month rule.
The Insurance Commissioner has the authority to may extend these limitation periods as to specific age group categories in specific policy forms, upon findings that the extension is in the best interest of the public.
The definition of "preexisting condition" shall not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant; and, on the basis of the answers on that application, from underwriting standards. Unless otherwise provided in the policy or certificate, a preexisting condition, regardless of whether or not it is disclosed on the application, need not be covered until the waiting period expires. No long-term care insurance policy or certificate may exclude or use waivers or riders of any kind to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period.
The point is that any given policy states the precise length of time that the insurer looks back into the insured's past medical history to decide what constitutes a pre‑existing condition. If the time period is six months, then, a condition for which the insured was treated one year ago and not since that time would not be a pre‑existing condition.
Whatever the period stipulated, if the insured needs long-term care because of any condition that meets the policy's exclusion definition, the insurer will not pay benefits. One must be aware that taking medication qualifies as "treatment." Typically, policies will eventually pay benefits even for a pre‑existing condition after the policy has been in force for a specified period.
The pre-existing conditions are different with tax-qualified plans as they provide that as long as the applicant was fully candid and provided the insurer all details regarding a particular medical problem, including the names of all attending physicians and consulted physicians and all medication in respect to such problem, then once the policy is issued, any disability related to that medical problem would be covered (subject, of course, to the terms of the policy and conditions and waiting period).
If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, such limitations shall appear as a separate paragraph of the policy or certificate and must be labeled as "Preexisting Condition Limitations.”94
The conditions that generally trigger the need for long-term care are basically:
Having any of these conditions does not automatically exclude the applicant from LTCI coverage, with a couple of exceptions as noted. But regardless, they are the ones that are the most carefully scrutinized by the underwriters.
Dementia – Forget about it (or as they say in NY, “Foggedabowdit”). If the person has it, they cannot get LTCI as there is no recovery as far as underwriters are concerned.
Diabetes mellitus is different. Juvenile diabetes causes problems, particular if they are seniors with this disease for many years. Adult diabetes can be controlled by diet and/or medication, and underwriters can assess the results better. Of course they are looking for such things as loss of a limb or an eye, kidney disease, neuropathy, hypertension, etc. Many insurers will offer policies to those with diabetes that have it well under control with insulin without complication for some period of time. If the applicant is diabetic, then a good agent will ask about a specific list of complications, instead of just accepting “I’m doing just fine” as a response.
Emphysema or chronic pulmonary disorders are rarely insurable. Obviously, if one has a hard time just breathing, they will also have a hard time taking care of themselves. They may look at the insured’s use of tobacco and estimate the use of oxygen, but usually, it is just turned down.
High blood pressure (hypertension) if uncontrolled, can lead to a stroke so it is of concern to underwriters. Medication available today will generally keep it under control, so they may be insurable. If they have ever had a stroke, even a little, teeny, one, they are uninsurable with most insurers.
Fractures, if they are the result of dizziness or falling, or because of osteoporosis, they are of interest to the underwriters. Underwriters may link the fall or dizziness with osteoporosis and if there is a history of falling, they may be declined. Seniors are notorious for losing their balance and falling, with catastrophic results sometimes. Many times those bones don’t heal like they used to, therefore there must be nursing home or other type of care, so the underwriters get nervous when they see a history of falling.
Bone diseases and joint diseases send up a red flag for the possibility of arthritis or osteoporosis, either of which can cause fractures. Also, if the person is on prednisone, which is used to treat rheumatoid arthritis, it can cause bone damage if taken in large doses—another underwriting problem.
Cancer covers such a broad spectrum that there is no one hard-and-fast rule. If a person has had cancer at least two years earlier (some companies require a longer period) and is free of treatment for this period of time and the cancer did not spread to other organs, some insurers will approve a policy. If the cancer had affected the lymph nodes, then there could be a 10 year waiting period – which pretty well serves as a decline for the older applicants.
Atrial fibrillation, arrhythmia, irregularities in the heart beat increases the risk of stroke by six times. Certain medications can help the heart work more efficiently, along with anticoagulants such as Coumadin, can reduce the possibility of a stroke by 60%, leaving 40%—therefore underwriters look very closely at those with these conditions.
Several years ago some insurers, in an effort to increase their market share, would accept applicants with health problems that other insurers would decline. Then, at time of claim the claim would be severely investigated in an attempt to deny the claim. This was, of course, unethical, and soon became illegal. Suffice it to say that the companies that were noted (notorious) for post-claims underwriting are no longer in existence. States approached this problem with severe restrictions and Delaware is no exception.
As with any insurance product, underwriting is essential to the ability to insure against specified risks or risk categories. Delaware regulations95 state:
All applications for long-term care insurance policies or certificates except those which are guaranteed issue must contain clear and unambiguous questions designed to ascertain the health condition of the applicant.
If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed.
If the medications listed in such application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate must not be rescinded for that condition.
(Except for policies or certificates which are guaranteed issue: )
The following language must be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate: Caution: If your answers on this application are incorrect or untrue [company] has the right to deny benefits or rescind your policy.96
The following language, or language substantially similar to the following, must be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery:
Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address].
Prior to issuance of a long-term care insurance policy or certificate to an applicant age eighty (80) or older, the insurer shall obtain one of the following:
1. A report of a physical examination,
2. An assessment of functional capacity,
3. An attending physician's statement, or
4. Copies of medical records.97
A copy of the completed application or enrollment form (whichever is applicable) shall be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application.98
Every insurer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and shall annually furnish this information to the Insurance Commissioner in the form prescribed by the National Association of Insurance Commissioners.99
All policies list certain conditions or circumstances that could lead to long-term care, but for which the policy will not pay benefits. Delaware regulations state:
Limitations and Exclusions. No policy may be delivered or issued for delivery in this state as long-term care insurance if such policy limits or excludes coverage by type of illness, treatment, medical condition or accident, except as follows100:
If both the insured and spouse apply for a Long Term Care Insurance policy at the same time with the insurer, and are both approved for coverage, the insured will receive a premium discount on both policies, usually 10-15%. In order for this to apply, the insurer usually requires that the same policy form is issued for both. Some companies may still give spousal credit if one of the spouses is declined, although this is generally not allowed. At one time in the past, when a company would allow the discount if one party was declined, some agents would take applications on both spouses knowing full-well that one would be declined, but the insurable spouse would receive the spousal discount—which might reduce the premium enough so that a sale could be made.
Termination of long-term care insurance must be without prejudice to any benefits payable for institutionalization which began while the long-term care insurance was in force and continues without interruption after termination. Such extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy101.
LTCI policies sold today are guaranteed renewable, which means as long as the insured pays the premiums the insurer may neither refuse to renew nor cancel the policy, regardless of the insured's health. In addition, the premium for a guaranteed renewable policy may be increased only if the insurance company raises premiums for every other policy of the same type sold to the same group of people. In other words, no single policy may be assessed a premium increase based on an individual insured's experience. However, if everyone in a certain geographical area or of a certain age group holding the same type of policy receives a rate increase, this is permissible. As for age, a guaranteed renewable policy prohibits insurers from increasing premiums solely because a specific insured is growing older. Each policy should clearly spell out the conditions under which an increase may occur. Insurers often guarantee the starting rate for some period, three or five years for example, regardless of external circumstances that might otherwise increase rates for all policyholders.
F Premium Increases : The premiums charged to an insured for long-term care insurance shall not increase due to either:(1) The increasing age of the insured at ages beyond sixty-five (65); or(2) The duration the insured has been covered under the policy.102
The terms "guaranteed renewable" and "noncancellable" shall not be used in any individual long-term care insurance policy without providing further explanatory language in accordance with the disclosure requirements of this regulation which states: “Individual long-term care insurance policies must contain a renewability provision consistent herewith. Such provision must be appropriately captioned, must appear on the first page of the policy, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy is issued and for which it may be renewed, subject to section 6.1 hereof. This provision shall not apply to policies which do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder.”103
F No long Term Care Insurance policy may be cancelled, non-renewed or otherwise terminated on the grounds of age or the deterioration of the mental or physical health of the insured individual or certificate holder.104
No such policy issued to an individual shall contain renewal provisions less favorable to the insured than "guaranteed renewable." However, the Commissioner may authorize nonrenewal on a statewide basis, on terms and conditions deemed necessary by the Commissioner, to best protect the interests of the insureds, if the insurer demonstrates that renewal will jeopardize the insurer's solvency.105
The term "guaranteed renewable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums, during which period the insurer has no unilateral right to make any change in any provision of the policy or rider, and cannot decline to renew and cannot revise rates except on a class basis in accordance with the regulations . This cost disclosure must be approved by the Commissioner and included in any solicitation and also prominently displayed on the initial policy.106
Every long-term care insurance policy or certificate issued or delivered in this State must be "guaranteed renewable" as defined in the regulations. 107
A long-term care insurance policy which provides for the payment of benefits based on standards described as "usual and customary", "reasonable and customary", "reasonable and prevailing", or words of similar import shall include a definition of such terms and an explanation of such terms in its Outline of Coverage.
The following cost disclosure information must appear in bold print on the cover page of every certificate and Outline of Coverage issued or delivered in this state: "This policy provides only the following price protection, and no more. Your premiums are guaranteed to remain the same for the first three (3) years this policy is in force. Your premiums may not increase by more than X% during any three year rating period. Insurers will be allowed a carry forward of the initially disclosed maximum premium increase, but said carry forward is lost within twenty-four (24) months if not utilized." Any additional language that appears under the cost disclosure section must be approved in advance by the Delaware Insurance Department.109
The purpose of this cost disclosure section is twofold: first, to make crystal clear to the purchaser what the maximum cost will be from year to year, and second, to prohibit the practice of low pricing during the early years of a policy followed by dramatic increases designed to produce a high ratio of cancellations when the group insured reaches that age at which its members are more likely to file claims. Therefore, this section does not permit annual increases to be accumulated and applied all at once. For example, if the price is $100 in the initial year of the policy and 10% is the represented annual maximum increase, then during the second year of the policy, the maximum allowable price is $110, the third year of the policy the maximum allowable price is not more than 110% of the price actually charges during year two of the policy. It is not permissible to charge $121 during the third year of the policy unless $110 had actually been charged during year two of the policy. In other words, any permitted annual price increase not implemented during a calendar year is thereafter waived and may not be considered in calculating future prices.
In addition to other requirements of this subsection, a tax-qualified long-term care insurance contract must be guaranteed renewable.110
Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed below to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an insurer shall provide all of the information listed in this section to the applicant no later than at the time of delivery of the policy or certificate.111
1. A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and
2. The right to a revised premium rate or rate schedule if the premium rate or rate schedule is changed.
Information regarding each premium rate increase on this policy form or similar policy forms over the past ten (10) years for this state or any other state that, at a minimum, identifies112:
1. The policy forms for which premium rates have been increased;
2. The calendar years when the form was available for purchase; and
3. The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.
The insurer may, in a fair manner, provide additional explanatory information related to the rate increases.
An insurer must have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition.
If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of the effective date of this section or the end of a twenty-four-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company must include the disclosure of that rate increase in accordance with these regulations.
If the acquiring insurer files for a subsequent rate increase, even within the twenty-four-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers the acquiring insurer must make all disclosures required, including disclosure of the earlier rate increase.
An applicant must sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant must sign no later than at the time of delivery of the policy or certificate.113
An insurer must use the forms in Appendices B and F to comply with the requirements of these regulations.114
An insurer must provide notice of an upcoming premium rate schedule increase to all policyholders or certificate holders, if applicable, at least forty-five (45) days prior to the implementation of the premium rate schedule increase by the insurer. The notice must include the information required when the rate increase is implemented.115
Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%) for individual policies and at least sixty-five percent (65%) for group policies, calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:
These section of this regulation shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:
The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy must require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge must be set forth in the policy, rider or endorsement.118
A long-term care insurance policy or certificate containing any limitations or conditions for eligibility, except in accordance with other regulations, must set forth a description of such limitations or conditions, including any required number of days or confinement, in a separate paragraph of the policy or certificate and must label such paragraph "Limitations or Conditions of Eligibility for Benefits."119
F A long-term care policy provides that the insured is entitled to a grace period of not less than 30 days, within which payment of any premium after the first may be made.
The insurer may require payment of an interest charge (usually not in excess of 8 percent per year) for the number of days elapsing before the payment of the premium, during which period the policy must continue in force. If the policy becomes a claim during the grace period before the overdue premium is paid, the amount of such premium or premiums with interest may be deducted in any settlement under the policy.
A long-term care policy can not be canceled for nonpayment of premium unless, after expiration of the grace period, and at least 30 days prior to the effective date of such cancellation, the insurer has mailed a notification of possible lapse in coverage to the policyholder and to a specified secondary addressee if such addressee has been designated in writing by name and address by the policyholder.
If a policy is canceled due to nonpayment of premium, the policyholder must be entitled to have the policy reinstated if, within a period of not less than 5 months after the date of cancellation, the policyholder or any secondary addressee designated demonstrates that the failure to pay the premium when due was unintentional and due to the cognitive impairment or loss of functional capacity of the policyholder.
Policy reinstatement shall be subject to payment of overdue premiums. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria for cognitive impairment or the loss of functional capacity, if any, contained in the policy and certificate.
The insurer may require payment of an interest charge not in excess of 8 percent per year for the number of days elapsing before the payment of the premium, during which period the policy shall continue in force if the demonstration of cognitive impairment is made. If the policy becomes a claim during the 180-day period before the overdue premium is paid, the amount of the premium or premiums with interest generally not in excess of 8 percent per year) may be deducted in any settlement under the policy.
When the policyholder or certificateholder pays premium for a long-term care insurance policy or certificate policy through a payroll or pension deduction plan, the requirements above need not be met until 60 days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.
If a policy is canceled due to nonpayment of premium, the policyholder shall be entitled to have the policy reinstated if, within a period of not less than 5 months after the date of cancellation, the policyholder or any secondary addressee demonstrates that the failure to pay the premium when due was unintentional and due to the cognitive impairment or loss of functional capacity of the policyholder.
Today’s LTCI policies are offered to people as young as 18 or 20, or sometimes no minimum age. In practice, most policies are offered to people from age 50 to age 84, though many are now offered to people in their 40’s with employer-sponsored or group LTCI. Even insurers who will write LTCI policies for younger people usually direct most of their marketing efforts to people who are older than 50 because younger people generally show less interest. Some agents and insurers may have a different philosophy and choose to actively solicit the younger business. Employer-sponsored or, group LTC Insurance is an exception; as younger age groups are targeted.
There are some policies designed to appeal to much older people and written with special features designed to appeal to the quite elderly. For example, currently some insurers offer older seniors a policy with a premium guaranteed to remain level for the life of the contract. Another allows inflation increases to be applied for the insured's lifetime, rather than expiring at a specified age, such as 85. Insurers will no doubt continue to innovate based on marketing and claims experiences, resulting in new features to appeal to those people insurers particularly want to target.
An individual LTCI policyholder or group certificate holder or applicant thereof has the right to return the policy within 30 days after its delivery and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason. Regulations require that a notice to this effect be prominently displayed on the policy.120
STUDY QUESTIONS
1. In determining the proper benefit period, one statistic to keep in mind is that
A. 94% of all people who entera nursing home stay less than 10 years.
B. 90% of all people who enter a nursing home stay less than 5 years.
C. 90% of all people who enter a nursing home stay less than 6 months.
D. 90% of all people who enter a nursing home, never leave.
2. While most people that are confined to a nursing home need care for three months or less, the average stay is
A. one year.
B. 2 ½ years.
C. 3 years.
D. 5 years.
3. “Preexisting” condition must mean a condition for which medical advice or treatment was recommended by, or received from a provider of health care services,
A. within one year preceding the effective date of coverage of an insured person.
B. that created a period of at least 6 months of skilled nursing care.
C. within 6 months preceding the effective date of coverage of an insured person.
D. and such condition must not exceed medical costs of $1,000.
4. One of the medical conditions that usually trigger benefit payments would be
A. dementia.
B. syphillis.
C. appendicitis.
D. pneumonia.
5. If the medications listed in an application for a LTCI policy were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied,
A. then the policy may be rescinded.
B. then the policy must be voided ab initio.
C. the policy cannot be rescinded for that condition.
D. the policy may not be rescinded but the premium may be increased proportionately to the risk.
6. The insurer must obtain a report of a physical examination, an assessment of functional capacity, an attending physician’s statement or copies of medical records in those situations where
A. the applicant is age 80 or older.
B. the applicant is under age 55.
C. the applicant is a person of prominence.
D. medical recordsd indicate the applicant was formerly in a nursing home.
7. Typically, a Spousal Discount is offered when both spouses
A. apply for different daily benefits.
B. apply for different Long Term Care Insurance policies.
C. have poor medical histories.
D. apply for the same policy form with the same benefits at the same time with the same insurer and both are approved for coverage.
8. Premium increases in a Long Term Care Insurance policy charged to an insured shall not increase due to either (1) the increasing age of the insured at ages beyond 65; or (2)
A. the increase in benefits requested by the insured.
B. approved purchase of the block of policies by another insurer.
C. with approval of the Department of insurance.
D. the duration the insured has been covered under the policy.
9. Every long-term care insurance policy or certificate issued or delivered in Delaware must be
A. guaranteed renewable and noncancellable.
B. sold by an insurer whose home office is located in the state.
C. "guaranteed renewable" as defined in the regulations.
D. a “Partnership Plan” policy.
10. If a policy is canceled due to nonpayment of premium, the policyholder shall be entitled to have the policy reinstated if, within a period of not less than 5 months after the date of cancellation, the policyholder or any secondary addressee demonstrates that the failure to pay the premium when due was
A. because of the financial condition of the policyholder.
B. unintentional and due to the cognitive impairment or loss of functional capacity of the policyholder.
C. because the policyholder simply forgot to pay the premium.
D. because of the insured applying to another insurer for coverage and being turned down.
11. An individual LTCI policyholder or group certificate holder or applicant thereof has the right to return the policy and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason,
A. within 30 days after its delivery
B. within 5 months after delivery of the policy.
C. and a notarized statement as to the reason for the declination is sent to the insurer.
D. within a period of 6 months provided the agent approves.
ANSWERS TO STUDY QUESTIONS
1B 2B 3C 4A 5C 6A 7D 8D 9C 10B 11A