H8 Long Term Care Insurance.2

CA Partnership CE Requirements

- agents must take an 8 hr CA Partnership class every 2 years

Evaluating LTC Insurance

- find out what policy covers - be sure can afford premiums - examine costs of elimination periods - consider level of coverage you buying - compare how companies determine eligibility for benefits

3 Ways to Issue LTC

1. Individual policy: gives insured most choices, but most expensive 2. Group policy: 3. Life Policy Rider: add long term care coverage added by adding LTC rider to life insurance policy

Waiver of Premium

provision included in LTC policies that waives policy premiums after insured has received covered LTC services for a stated number of days (e.g. 90 days)

LTC Policy Replacements

- replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods to the extent they have been satisfied under the original policy - LTC application must contain question regarding replacement - if replacement is involved, "Notice to applicant regarding replacement of accident and sickness or long-term care insurance' must be completed

Rejection of Inflation Protection

form that must be signed by applicant if one of the inflation protection options is not purchased

LTC Marketing Standards

1. assure that agents' comparison of policies will be fair and accurate 2. assure excessive insurance is not sold or issued 3. submit semi-annual list to commissioner of agents authorized to transact LTC insurance - must meet initial training and continuing education requirements (course that covers LTC services and facilities, alternative to LTC and CA regulations)

Free-look period

All individual LTC policies must have a 30 day free-look period, regardless of insured's age

Unnecessary Replacement

An agent shall not cause a policyholder to replace a LTC insurance policy... Unnecessarily OR that results in a decrease in benefits and an increase in premium * 3 or more policies sold to a policyholder in a 12 month period is automatically deemed to be unnecessary

HICAP

Health Insurance Counseling & Advocacy Program Helps elderly people with: - complaints about agents - Medicare/ Med Supp - Long Term Care - Limited Legal assistance - prescription drug counseling HICAP does NOT sell or endorse any type of insurance Free to seniors that use it; funded by state and local governments agent must provide an applicant the name, address and phone number of local HICAP office when selling LTC Policy and Med Supp Policy

Duty of Honesty, Good Faith and Fair Dealing

LTC insurers, agents and brokers owe policy owners a - duty of honesty - duty of good faith - duty of fair dealing

LTC Prohibited Provisions

LTC may NOT: - be canceled based on age or deterioration of mental or physical health - establish a new waiting period if existing coverage replaced by a new policy with the same insurer - provide coverage for skilled nursing care only OR provide significantly more coverage for skilled care in a facility than coverage for lower levels of care - provide for payment of benefits based on a standard described as 'usual and customary, ' 'reasonable and customary' or words of similar import - contain a provision that allows the premium for an in-force policy to be increased due to the divorce of a policyholder - include an additional benefit for a service with a known market value unless the additional benefit provides for the payment of at least five times the daily benefit and the dollar value of the additional benefit is disclosed in the schedule page of the policy

Tax qualified and Non-Tax qualified

LTC policies are classified as either TQ or Non-TQ 1. Non-Tax Qualified: easier to qualify for benefits; premiums not deductible; benefit may be taxable 2. Tax Qualified: more difficult to qualify for benefits; premiums may be tax deductible; benefits are not taxable Required in all TQ LTC policies: "This contract may qualify you for federal and satiate tax benefits"

Renewability Provisions

Only one are permitted in LTC policies: 1. noncancelable: cannot be cancelled (except for non-payment of premium); premiums cannot be increased or 2. guaranteed renewable: cannot be cancelled; premiums can be increased, but by class ONLY

Pre-existing Conditions

Pre-existing conditions must be covered no later than 6 months after the policy's effective date

Alzheimer's

mental conditions of an organic nature, such as Alzheimer's are required to be covered by LTC policies

Suitability Standards

must be used to determine whether the purchase or replacement of LTC insurance is appropriate for the applicant info about: - premium - rate increase history - income info - savings and investments MUST be signed by applicant and agent

Buyer's (Shopper's) Guide/Outline

must provide at the time or initial solicitation: 1. buyer's (shopper's) guide 2. outline of coverage

Elimination (Waiting) Period

number of days that must pass before policy benefits begin - 30, 60, 90, 120, 180 days - time deductible; the shorter the waiting period, the higher the premium

Cold Lead Device Disclosure

obtaining sales leads through advertising that hides the fact that an agent or company may try to sell insurance - An agent or broker who contacts a consumer as a result of receiving information generated by a cold lead device, shall immediately disclose that fact to the consumer.

Nonforfeiture Benefit

option that provides shortened benefit period after lapse or cancellation if policy has been in force for a specified period of time ex. in force for 10 yrs minimum; amount payable will be greater of: total prem-claims or daily benefit x 90

Inflation Protection

optional rider that increases the policy's benefit in order to combat the effects of inflation (insurers legally required to offer 1. Simple Inflation Rider: automatically increases policy's daily benefit amount by 5% of original daily benefit each year 2. Compound inflation rider: benefit increases by 5% of the previous year's daily benefit amount, not the original amount 3. Future Purchase options: insured can purchase periodic inflation protection increases in the policy's daily benefit amount

California Partnership Policy

state program that allows certain insurance companies to issue special long term care policies with a feature designed to help protect some of insured's assets should he ever have to turn to Medi-Cal to pay for long term care expenses