core standards for individual long term care insurance policies

Date: 7/13/10
Under review by the Product Standards Committee
Higlighted changes are those added since the 7/6 draft.
(ii)
(iii)
(iv)
Extended term insurance
Shortened benefit period, or
Other similar offerings approved for use by the Interstate Insurance Product Regulation
Commission.
(3) A shortened benefit period nonforfeiture benefit shall provide paid-up long-term care insurance coverage
after lapse as follows:
(a)
(b)
(c)
The same benefits (amounts and frequency in effect at the time of lapse but not increased
thereafter) shall be payable for a qualifying claim, but the lifetime maximum dollars or days of
benefits shall be determined as specified in Item (3)(b), below;
The standard nonforfeiture credit shall be described in the policy and shall be equal to 100% of the
sum of all premiums paid, including the premiums paid prior to any changes in benefits. The
company may offer additional shortened benefit period options, as long as the benefits for each
duration equal or exceed the standard nonforfeiture credit for that duration. However, the
minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home
benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit shall be
subject to the limitation in Item (4), below;
The policy shall state that nonforfeiture credits may be used for all care and services qualifying for
benefits under the terms of the policy, up to the limits specified in the policy;
(4) The contingent benefit on lapse benefit contained in a long-term care policy, or added by rider,
endorsement, or amendment to a long-term care policy at issue, shall be subject to the following
requirements:
(a)
The policy shall indicate that a contingent benefit on lapse shall be triggered for an insured every
time a company increases the premium rate schedule (issue age or modified) to a level which
results in a cumulative increase in the insured’s premium equal to or exceeding the percentage of
the insured’s initial premium rate schedule set forth below, based on the insured’s issue age, and
the policy lapses within 120 days of the due date of the premium so increased. The owner shall be
notified at least sixty (60) days prior to the due date of the premium reflecting the premium rate
schedule increase.
Triggers for a Substantial Premium Increase
Percent Increase Over
Issue Age
Initial Premium Rate
Schedule
29 and under 200%
30-34 190%
35-39 170%
40-44 150%
45-49 130%
50-54 110%
55-59 90%
60 70%
61 66%
62 62%
63 58%
64 54%
© IIPRC 2010 18