Taking Care of Mom and Dad: LTC Applications

Applications for long-term care insurance (except guaranteed issue LTC insurance) must contain clear, simple questions designed to ascertain your health condition. Questions must contain only one inquiry each and require only a "yes" or "no" answer (except for names of physicians and prescribed medications).

Many states require the application to include the warning: If your answers on this application are misstated or untrue, the insurer may have the right to deny benefits or rescind your coverage.

If the insurance company does not complete medical underwriting and resolve all reasonable questions on the application before issuing the policy, it may only rescind the policy or deny a claim on clear evidence of fraud or material misrepresentation. The fraud must pertain to the condition for which benefits are sought, involve a chronic condition or involve dates of treatment before the date of application and be material to the acceptance for coverage.

The contestability period is usually two years. Some states require insurers to maintain records of all policy rescissions and annually report them to the insurance department.