Long Term Care Premium Payments, Grace Periods
The provisions in the sample long term care insurance policy clearly state the specific
conditions under which benefits will not be paid. Most policies contain provisions similar to
those outlined below.
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The premium is due and payable on the Original Coverage Effective Date of the Policy and
thereafter in accordance with the Premium Schedule that is in effect for the Policy as shown on
the Schedule of Benefits page. The premium must be paid in U.S. currency.
| COMMENT: The premium shown on the Schedule of Benefits page breaks down the premium for the policy
and any riders separately, subtracts any discounts and then shows the total amount to be paid by
the time period (the monthly, quarterly, semi-annual or annual mode) you selected. |
You may change the premium payment mode with Our approval.
The amount of the premium for Your initial coverage is based on Your Original Issue Age,
Health Rating and Discounts, as of the Original Coverage Effective Date as shown on
the Schedule of Benefits page.
| COMMENT: The Health Rating describes the class of coverage you to which you are
assigned by the insurance company based on your health history (e.g., Sub-Standard, Standard,
Preferred). This affects your premium. The better your Health Rating, the lower your
premium. |
We reserve the right to change premium rates on a class basis. The premium will not increase
because You get older or Your health changes. Your premium will change if We change Your benefit
amounts as a result of Your request or as a result of an increase as provided under the terms of
the Policy.
| COMMENT: Most long term care policies, like this one, only allow the insurance company to
change the premium rates on a policy if it changes the rates for all polices in the class. For
example, if you are issued a policy in the Preferred class and the insurer increases the premium
for your policy, it is required to increase the premium for all similar polices in the same class
(Preferred) as yours. Typically, an insurance company might increase premium if it notices that
its loss experience (more benefits being paid that premium being collected) for a particular class
of a particular policy is not good. |
Grace Period
The provisions in the sample long term care insurance policy clearly state the specific
conditions under which benefits will not be paid. Most policies contain provisions similar to
those outlined below.
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You have a Grace Period of thirty-one (31) days to pay each premium due after the first
premium. If the premium is not paid by the end of the Grace Period, We will send a written
notice of Lapse of the Policy to You and to any person names to receive such notice a the
addresses given to Us. You have thirty-five (35) days after We mail this notice to pay the
premium. The policy will stay in force during this time unless We receive a written request from
You to cancel the Policy. If We do not receive the premium within thirty-five (35) days of
mailing the notice, the policy will then Lapse.
If a claim is payable for services incurred prior to Lapse, any unpaid premiums due will
be deducted from the claim payment.
You have the right to name a person to receive notice of Lapse at the same time We send
such notice to You. The person named will not be responsible for payment of the premium. You are
responsible to inform Us of any change relating tot the person named. We will inform you of Your
right to change the person named at least once every two (2) years.
| COMMENT: Take note that the policy does not, in fact, lapse at the end of the 31-day
Grace Period. The insurance company does not want to lose your business. For that reason,
it gives you a third chance to pay your premium after the end of the original due date and before
it lapses your policy. It also encourages you to name a second person to receive notices regarding
premiums, recognizing the fact that many people who have long term care insurance premiums coming
due may be approaching the forgetful stage of their lives and inadvertently stop paying their
premium. |
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