Merritt Personal Lines Manual: Common Policy Provisions
Different insurance companies use different forms for their long-term care policies -- unlike homeowners insurance, which is written on standard forms. So, long-term care policies differ from company to company. However, there are a few common policy provisions.
For example, most individual long-term care policies are guaranteed renewable. This means the insurance company guarantees to renew the policy at the end of its term -- but it does not guarantee at which premium the policy will be renewed. The insurance company cannot cancel the policy, but it does reserve the right to increase premiums in accordance with the policy provisions.
If the premiums are to be increased, they will be changed on the policy anniversary and the increased premium will be for an entire class of insureds, not just a single individual. For example, all policyholders in a given state will have their premiums increased on their respective policy anniversaries.
A small number of individual LTC policies are optionally renewable. The insurance company has the option to renew, cancel or increase the premiums by class. Most companies market guaranteed-renewable contracts and refrain from issuing optionally renewable ones. Eventually, there also may be non-cancellable LTC contracts issued -- meaning both renewability and the premium are guaranteed for the life of the policy.
LTC policies also provide for a 30-day free look. If you are not satisfied with your policy when it arrives, you have 30 days during which you can return it to the insurance company for a full refund of any premium paid.
Some LTC policies also provide a guaranteed-purchase option, which allows you to buy higher amounts of coverage at specific intervals. For instance, the provision may read: The policyholder may increase coverage by 25 percent of the underwritten amount every two years until protection is doubled.
Newer policies offer prescription drug benefits, nursing home bed reservations, an accidental death benefit, benefits for durable medical equipment and benefits for home modification. Others are offering managed care-type benefits, where care is provided through a preferred provider network.
