Sample Cover Page for Long Term Care Insurance Policy

COMMENT: The following is sample wording for the cover page of a typical long term care insurance policy. The design of the cover page will vary from one company to another, but the substance will be similar because much of the wording is required by state or federal law.

Sample Life Insurance Company (Sample Life) will pay the benefits of this Policy according to its provisions.

Long Term Care Insurance Policy

• RENEWABILITY: THIS POLICY IS GUARANTEED RENEWABLE FOR LIFE. PREMIUM RATES ARE SUBJECT TO CHANGE. This means You have the right, subject to the terms of the Policy, to continue this Policy as long as You pay Your premiums on time. We cannot change any of the terms of this Policy without Your consent, except that We may change the premium rates, subject to applicable state insurance department approval. Any such change in premium rates will apply to policies in the same class as Yours in the state where this Policy was issued.
• The Schedule of Benefitsprovided by this Policy is shown on page 3.
• This Policy is not eligible for dividends.

IMPORTANT NOTICE: Please read the copy of the application attached to this Policy. Carefully check the application and write to Sample Life Insurance Company, P.O. Box 123456, Anytown, NY 22212-7890, within thirty (30) days, if any information shown on it is not correct and complete, or if any past medical history has been left off of the application. This application is part of the Policy and the Policy was issued on the basis that answers to all questions and the information shown on the application are correct and complete.

COMMENT: Guaranteed renewable for life means that the insurance company cannot, for any reason, cancel your policy. But it can increase your premiums. If the policy were what is called “non-cancelable,” then the insurance company could not, for any reason, cancel your policy OR increase your premiums.

If the insurance company changes the premium rates on your policy after it is issued and in force, the rates can only be changed on a class basis. In other words, the premium for every policy “in the same class” that was issued in the same state where your policy was issued will be changed based on the same actuarial formula. “Class” means underwriting class, which can mean many things, all based on an insurance risk category determined by the insurance company. This may be something as simple as age group, gender, policy type, occupation, or other special criteria, or it may be a broader, more inclusive, category, based, for example on an over-all risk analysis, such as “Preferred”, “Standard” and “Substandard”.

Each underwriting class has its own premium level. At time of initial underwriting, the insurance company determines your class based on its assessment of the degree of risk you present to the company. In the example, if your policy was issued as “Preferred”, that would mean the company considered you a good (safe) insurance risk.

If the company decides to change insurance premiums on your type of policy, the proposed rate changes must be filed with the insurance departments in the states where the company wants to make the changes. Insurance departments look for two things when they review rate change filings: First, are they reasonable and justifiable; second, does the insurance company plan to apply the rate change to every insured in the classes where the change is proposed. In other words, in the above example, the insurance department will want to make sure that the rate increase will be the same for all those who were issued your type of policy on a “Preferred” basis.

IMPORTANT NOTICE: Please read the copy of the application attached to this Policy. Carefully check the application and write to Sample Life Insurance Company, P.O. Box 123456, Anytown, NY 22212-7890, within thirty (30) days, if any information shown on it is not correct and complete, or if any past medical history has been left off of the application. This application is part of the Policy and the Policy was issued on the basis that answers to all questions and the information shown on the application are correct and complete.

COMMENT: This is a very clear warning that makes you responsible for the accuracy of the information on your application for insurance. This IMPORTANT NOTICE gives you thirty days to correct any misinformation on the application. In other words, it gives you a second chance. Often inaccurate information is a result of a mistake, when the agent inadvertently reports your information incorrectly. The NOTICE also tells you that the application is part of the policy. In other words, it is part of the legal contract between you and the insurance company. Then it states that the policy was issued on the assumption that the answers and other information on the application are correct and complete. The insurance company is telling you that it relied on the information you provided on the application when it decided to issue your policy.

This wording is an attempt to provide the company with a sound basis for rescinding, or canceling your policy if information on the application later is found to be false. False information usually is discovered when a claim is filed and medical records received in connection with the claim contradict information on the application.

NOTICE TO THE BUYER: This Policy may not cover all of the costs associated with long term care incurred by the Buyer during the period of coverage. The Buyer is advised to review carefully ALL policy limitations.

COMMENT: You are encouraged to read the entire contract to be sure it provides exactly what you thought it was going to provide. Often, with any kind of insurance a great chasm exists between what the applicant thinks he or she is getting based on discussions with the agent and what actually is delivered. You should be sure to read through the policy when you receive it.

This Policy is intended to be a qualified long term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended. If in the future, it is determined that this Policy does not meet the requirements of the Internal Revenue Code, We will make every reasonable effort to amend the Policy if We are required to do so in order to gain favorable federal income tax treatment. We will offer You an opportunity to receive these amendments, with any appropriate adjustments, as determined by Sample Life, to premium rates and and/or benefits.

COMMENT: In many respects, a long term care insurance policy is different than your normal health insurance policy. For example, it does not provide benefits for treatment to improve health, but basically provides coverage for maintenance services, some of which having nothing to do with medical care. However, if the policy meets certain requirement of the Internal Revenue Code, premiums paid and benefits received will be treated, for tax purposes, as though they were for accident and health insurance. This provision assures that if federal rules change, the company will try to comply with them if they apply to this policy.

Joan A. Smith Senior Vice President and Secretary

Harry T. Andrews Chairman of the Board President and CEO

Thirty Day Right to Examine Policy

Please read this Policy carefully. It is a legal contract between You and Sample Life. If you are not satisfied for any reason, You may return this Policy to Us or to the sales representative from whom You bought it within thirty (30) days from the date You receive it. If You return it within the thirty (30 ) day period, this Policy will be void from the beginning. We will refund any premium paid within thirty (30) days after We receive the returned Policy.

This is your basic 30-day free look provision which required by every state. It ties in nicely with some of the other provisions.

Case Studies: Long Term Care Insurance Policy

Case Study 1: Inaccurate Application Information

Lisa purchased a long-term care insurance policy from Sample Life Insurance Company. However, upon reviewing the attached application, she discovered that some of the information provided was incorrect and incomplete. Realizing the importance of accurate disclosure, she promptly contacted Sample Life to correct the errors. This case highlights the significance of carefully reviewing policy applications and promptly notifying the insurer of any inaccuracies to ensure the policy remains valid.

Case Study 2: Premium Rate Changes

Mark received a notice from Sample Life Insurance Company stating that the premium rates on his long-term care insurance policy would be adjusted. The company explained that the rate changes were implemented on a class basis, affecting all policies within the same risk category. Mark’s policy was initially issued under the “Preferred” class, indicating a lower insurance risk. Although the rate increase was unwelcome, Mark understood that state insurance departments review and approve such changes for fairness and consistency.

Case Study 3: Thirty-Day Right to Examine Policy

After receiving her long-term care insurance policy from Sample Life, Sarah carefully reviewed its terms and provisions. However, upon further consideration, she decided that the policy did not meet her specific needs. Within the thirty-day period allowed for examination, Sarah returned the policy to Sample Life, and the company promptly refunded her premium. This case emphasizes the importance of the 30-day free look provision, enabling policyholders to evaluate their coverage and make informed decisions.