Waiver of Premiums and Reinstatement of Long Term Care Policy and Cognitive Impairment

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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We will waive Your premium starting on the first day of the Policy Month which starts on or next follows the later of the date on which You: (1) become eligible for Benefits; and (2) satisfy the Elimination Period. You must resume payment of Your premium starting on the first day of the Policy Month, which starts on or next follows the date on which You are no longer eligible for Benefits.

COMMENT: Under this Policy, once you have become eligible for Benefits and satisfied the Elimination Period, you no longer are required to pay the premium as long as you remain eligible for Benefits. You will lose your eligibility for Benefits when you are no longer Chronically Ill. Under the terms of the Policy, you are deemed to no longer be Chronically Ill when you no longer require either Hands-On Assistance or Standby Assistance to perform at least two of the Activities of Daily Living or you no longer suffer Severe Cognitive Impairment.

Reinstatement 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.

If Your Policy Lapses, We will reinstate Your Policy back to the date it Lapsed, if within twelve (12) months of that date You or someone acting for You:

  1. Request reinstatement;
  2. Submit proof of good health, acceptable to Us, at Your expense; and
  3. Pay all past due premiums to Us, if We approve Your request for reinstatement.

If We reinstate Your Policy, Your premium will be what it would have been if Your coverage had not Lapsed.

COMMENT: The insurance company really wants your business. The company will actually give you 4 opportunities to keep your Policy in force. First, just pay your premium on time. Second, if you don’t pay it on time, at least pay it within thirty-one days after the premium due date, in other words, within the Policy Grace Period. Third, if you can’t get that done, the company will send you a written notice of Lapse. You have 35 days from the date that notice is mailed to send in the premium due. If you do this, your Policy will remain in force.

If you fail to do all of the above, the company gives you a fourthopportunity to keep your Policy in force. It is called reinstatement. You can take advantage of this fourth opportunity for 12 months after the date your Policy lapsed. Reinstatement is a little different than the other three. You have to do more than just send in your money. You have to send in all premiums due, but you also have to request reinstatement AND you have to submit proof of good health. In other words, if your health status has taken a turn for the worse, the company has the right to decline reinstatement.

Since the insurance company is giving you a reasonably long period of time to reinstate (12 months), the company requires you to prove your continuing good health before it will agree to reinstate. It does this in order to protect against what the insurance industry calls “anti- selection” (choosing to insure only because you know you are not healthy).

Reinstatement for Cognitive Impairment or Loss of Functional Capacity

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.

If Your Policy Lapses, We will reinstate Your Policy back to the date it Lapsed, without proof of Your good health, if within six (6) months of that date, You or someone acting for You:

  1. Request reinstatement;
  2. Submit proof acceptable to Us that You had a Severe Cognitive Impairment or loss of functional capacity before the Policy Lapsed; and
  3. Pay all past due premiums to Us, if We approve Your request for reinstatement.

The standard of proof We will use will be no more restrictive than that described in the Eligibility for the Payment of Benefits section.

If We reinstate Your policy, Your premium will be what it would have been if Your coverage had not Lapsed.

COMMENT: The insurance company, under this provision, gives you, or someone acting on your behalf, the opportunity to reinstate the Policy without requiring proof of your good health if it can be shown that you were suffering from either Severe Cognitive Impairment or loss of functional capacity before the Policy Lapsed. In other words, if the Lapse was likely a result of your mental or physical inability to pay the premium, the company will provide a six-month period in which the Policy can be reinstated without requiring proof of your good health.