Long Term Care Free Look Period

Forms If You Are Supporting A Dependent

Elder Law Report: Look-Back Periods – LTC Medicaid & VA

Use one or more of these forms, as needed, to request to keep income because you support an eligible:

What Must Be Included In A Long

Like most insurance policies, the details of services covered and benefits paid will vary from policy to policy. However, state law requires that certain provisions be included in all long-term care insurance policies. Some of these provisions are:

  • Coverage for all levels of nursing home care: skilled, intermediate, and custodial
  • Coverage for 12 months or longer
  • Policies must be guaranteed renewable. This means the company cannot cancel your policy for any reason except non-payment of premiums or a misrepresentation on your application for coverage
  • No longer than 6-month pre-existing condition exclusion
  • 30-day free look period. You can return the policy for any reason during this time and receive a full refund.
  • Benefits cannot be conditioned on a hospital stay prior to admission to a nursing home
  • Benefits cannot differ based on the type of illness or disability being treated. However, policies do not pay for drug or alcohol treatments, or mental or nervous disorders. Coverage for those diagnosed as having Alzheimers disease and other organic brain disorders is required.

Other long-term care benefits do vary widely by policy. For example some policies:

What Services Do Insurance Policies Cover

Insurance policies describe what they will cover, what kind of care they will cover, who can provide the care and conditions that need to be met before a company will pay/reimburse the cost of benefits. Described below are the services required in a long-term care insurance policy approved under current California law. Be aware however, that California law has changed many times over the years and that insurance policies sold in previous years may have different requirements than are shown here.

Facility Coverage: In California, most skilled, intermediate and custodial care is received in nursing homes that are licensed as “skilled nursing facilities”. All long-term care policies except Home Care Only cover this kind of care.

Policies sold after October 2001 are required to include a benefit to cover care in an RCF/RCFE. Some insurance policies sold before October 2001 may also include this benefit. RCF/RCFEs are not nursing homes but living arrangements wherein a person can also receive personal care or supervision. Some RCF/RCFEs are large retirement homes while others are small group homes.

Home Care Coverage: Every long-term care insurance policy called “Home Care Only” or “Comprehensive Long-Term Care” must include at least the following 6 Home Care benefits and other consumer protections which should make it easier to receive care at home.

  • 1. Home Health Care is skilled nursing care or other professional services in your residence.
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    History Of The Free Look Period

    The U.S. life insurance industry was once very poorly regulated and rife with scams. Back in the 1930s and 1940s, the industry tended to attract unscrupulous characters. Much of the life insurance industry got a bad reputation because of high-pressure tactics, badgering of customers, and many disreputable, insolvent, or nonexistent insurance companies that never paid claims.

    Luckily, the industry has vastly improved since those days. The negative reputation of the past forced the industry to reform its practices. State governments also got heavily involved with complaints about abusive sales strategies. They also responded with legislation this is one of the reasons the free look period came into existence.

    The Appeal Of Combination Policies

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    Aside from the fact that you get something for your premium no matter what, the biggest advantages of combination policies are:

    • The policy can be a good investment if you otherwise would have spent the money or kept it in a low-yield account.
    • You wont have premium hikes when you pay with a lump sum, and a policy with a limited number of payments might even guarantee the premiums will stay the same. Some owners of traditional long-term care insurance policies have seen their premiums double within the past several years as care costs have surpassed insurance companies projections. And with historically low interest rates, insurers havent made enough investment income off of premiums to pay claims.
    • Theres a money-back guarantee with some combination policies. The insurance company will return your premium if you decide you dont want the policy after a certain period of time, such as five years. Before then, you can get a percentage of the premium back.

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    What Are The Premium Requirements

    Last but not least are the policys premium payment options. This is somewhat of the million dollar question as it relates to how much does your policy cost.

    Policies today give you the option to place single or flexible premiums into a hybrid Long-term care insurance policy.

    There is no good in considering a policy that does not work with you financially or your budget.

    When considering our illustration, Nationwide offers both single and flexible premium payments. For example, they allow you to pay a single premium or a 5 or 10 pay premium option.

    Typically, when funding a hybrid policy with $100,000 for example, a single premium option will provide more LTC benefits than the policys 10-pay option.

    Therefore consider your premium payment options and what works best for you when picking a hybrid policy.

    How Combination Policies Work

    Combination long-term care/life insurance policies pay for long-term care that regular health insurance or Medicare wont cover. And if you dont max out the long-term care benefits, the insurer pays a benefit to your beneficiary upon your death.

    Also called linked or asset-based policies, combination products work this way:

    • Depending on the policy, you pay one lump-sum premium or a few large annual premiums typically for fewer than 10 years, according to LIMRA, an industry research and consulting group. The average cost of a single-premium combination policy is $75,000, according to the American Association for Long-Term Care Insurance.
    • The policy provides a pot of money for long-term care thats equal to several times your premium payments.
    • The policys death benefit will be reduced which means less money for your life insurance beneficiary according to how much of the long-term care benefit you use. Some policies guarantee a small percentage of the full death benefit, such as 10%, even if you use all the money allocated for long-term care.
    • Youll need to supply medical records and take a life insurance medical exam to qualify for some combination policies. Others offer simplified underwriting, which means you may only need to answer health questions over the phone. If youre healthy, youll pay less for coverage if you buy a policy that requires both an exam and submission of medical records.

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    Buy Sooner Rather Than Later

    The key to long-term care insurance is to apply early while its inexpensive, says Kevin M. Lynch, insurance instructor at the American College of Financial Services in King of Prussia, Pennsylvania.

    You can buy long-term care insurance up to age 75 from most companies, but youll pay more at older ages and if you have health conditions.

    The ideal age to start shopping? I think 50 is the magic number, says Deb Newman, founder of Newman Long Term Care, an independent insurance agency in Richfield, Minnesota.

    Dont give up if youve passed the half-century mark. Apply at least 60 days before your next birthday to get a price based on your current age, advises Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

    Go For A Simple Vs Souped

    What Does Long Term Care Include?

    Ask for quotes for good, better and best coverage from each company to see costs at different levels, Slome says.

    Avoid adding features, called riders, that you dont need. Keep it a good, simple long-term care policy without all the bells and whistles, Gordon says.

    An example is a restoration of benefits rider: If you need long-term care but then get better, the benefits you used are restored for a later date. But Gordon says once people start to need long-term care, they usually continue to need it.

    An inflation protection rider allows your benefits to grow to keep up with inflation. Reducing the inflation protection from, say, 3% to 1% will drop the policy price. If youre older, say 70 instead of 55, you may be able to get by with less inflation protection, Lynch says.

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    Protection For Annuity Holders

    The free look period is one of several reforms that addressed abusive sales tactics in the first half of the 20th century. Its designed to help consumers make decisions without being pressured or badgered. It gives people a chance to further review their financial decision and ensure its the best option for them.

    During the free look period, you can still research your annuity and see if others have a better deal. You can make sure you understand how your annuity works. You can read your contract and ask questions. You can ask a lawyer or a financial advisor or a family member to review the policy for you.

    And in the end if you decide you dont want the annuity after all, or you want to purchase one from a different provider, you can cancel your contract without having to explain why, as long as youre still within the specified free look period. You dont even have to contact your agent to cancel if you dont want to. You can just call the insurance agency that issued the annuity. Just remember, the clock starts ticking when your annuity contract is delivered to you.

    How Much Does Long

    The cost of care in the future will be much higher than it is today. California nursing home rates increased at an average rate of over 5% per year during the past twenty years and are likely in the future to continue to increase by at least 5% per year. A 5% annual increase means a year of care that costs $50,000 today will cost twice that amount in 14 years, or $100,000 a year.

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    Long Term Care Insurance

    The California legislature requires the Insurance Commissioner to annually prepare a Consumer Rate Guide for long-term care insurance. This website consists of an overview of long-term care insurance, the types of benefits and policies you can buy, both as an individual and as a member of a group, information on what to consider before purchasing a policy and the premium rate history of each company that sells long-term care insurance in California.

    This website will help answer some of your questions about long-term care insurance. It explains why people may need long-term care and how this type of insurance can help cover the cost for care. Long-Term Care policies most often pay for benefits on a reimbursement basis which means that the payment will be made to you after you have received the covered care and/or incurred the costs and submitted a claim. However, there are some policies that will pay a cash benefit. It is important to understand the coverage provided and how benefits will be paid/reimbursed before you purchase a long-term care insurance policy. When you receive your policy, be sure to read it and ask questions if there is anything in the policy that you don’t understand. The Rate Guide explains how long-term care insurance is structured and what benefits you can buy. A qualified long-term care insurance agent or the Health Insurance Counseling and Advocacy Program can help you with these questions and many others.

    What Is Inflation Protection

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    Inflation Protection is intended to help maintain the value of the benefits you purchase today so they will keep up with future increases in the cost of care. In the past, long-term care costs in California have increased at an annual rate of more than 5%.

    Protecting against the rising cost of care is one of the most important choices you will make. Inflation protection increases the Daily Maximum, the Maximum Lifetime Benefit and other benefit amounts. If you purchase individual long-term care insurance, your insurer must offer you at the time you purchase the policy the option to purchase an inflation protection feature. Your insurer must offer inflation protection which is no less favorable than the following options: Increases benefit levels annually so that the increases are compounded annually at least 5% or a Benefit Increase Option.

    While the premiums are designed to remain level, insurance companies may apply for rate increases that, if approved by the CDI, will increase your premium in the future.

    2. Benefit Increase Option. This option allows you to pay an additional premium to increase the benefit coverage amounts at stated intervals during the life of the policy . There are usually a limited number of increase options offered to you over the life of the policy. If you decide not to exercise this option one or more times when it is offered, you will lose any chances to increase your benefits in the future.

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    Example Of The Free Look Period

    Let’s say that Sam, who lives in Texas, buys a variable life insurance policy from their local insurance agent. After signing up for the policy, Sam receives their executed policy documents in the mail two days later. Sam’s free look period begins when they receive those documents. In Texas, they have 10 days to review the policy and decide whether they want to keep it.

    Two days later, Sam brings their policy to their lawyer to review, and their lawyer advises them to cancel the policy and go with another insurer instead. Sam takes their lawyer’s advice and advises their insurer the next day that they want to cancel the policy. The insurer is obliged under law to comply with their wishes, and the insurer refunds Sam’s initial premium payment.

    How Much In Benefits Will The Policy Pay

    The benefits your policy pay depend on the type of coverage you purchase. You may choose a benefit period that is a specific number of days, months or years. A maximum benefit period may range from one year to the remainder of your lifetime. It is important to ask the person selling the policy if the benefit amounts will increase with inflation and if that coverage increases your premium.

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    States Regulate Free Look Periods

    The amount of time you have to change your mind about an annuity depends on the state in which you purchase your annuity. And the states are all over the map on this in more ways than one.

    Some states, such as Arizona, California and Florida, require longer free look periods for senior citizens. Other states, such as Alaska, Nevada, Ohio, Oregon and Texas, require longer periods for replacement annuity policies than for new policies.

    Wyoming requires a 30-day free look period for replacement policies, but it doesnt require one for new annuity contracts. Virginia requires a 10-day free look period for replacement contracts, but the state has no legal requirement for new annuities.

    Some states, such as Colorado and Vermont, have no legally required free look periods. Other states, such as Maine and New Mexico, require free look periods only if the annuity company failed to provide the purchaser with required consumer guide information.

    And yet other states, combine the various requirements. Ohio and Hawaii, for example, require a 10-day free look period for new annuity contracts. That increases to 15 days if the buyer wasnt provided with required information at the time of purchase. And it goes up to 30 days for replacement annuity contracts.

    Brenda Clark, a consumer services administrator with the Vermont Department of Financial Regulation, told Annuity.org that no company has ever pushed back on providing consumers with contracts that abide by this standard.


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