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 Benefitspage. 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 Benefitspage.

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 Lapseat 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.