(a) Long-term care
insurance application forms shall request information as to other accident and
health insurance coverage in force and whether the insurance to be issued is
intended to replace any other accident and sickness policy presently in force.
A supplementary application or other form to be signed by the applicant
containing such a question may be used.
(b) Upon determining that a sale will involve
replacement, an insurer or its agent, other than a direct response insurer,
shall furnish the applicant, prior to issuance or delivery of the individual
long-term care insurance policy, notice regarding replacement of accident and
sickness coverage. One copy of the notice shall be retained by the applicant
and an additional copy signed by the applicant shall be retained by the
insurer. A direct response insurer shall deliver to the applicant upon issuance
of the policy the notice regarding replacement of accident and sickness
coverage.
(c) If a long-term care
policy replaces another long-term care policy issued by the company or an
affiliated company, the replacing insurer shall waive any time periods
applicable to pre-existing conditions, waiting periods, elimination periods and
probationary periods present in the new long-term care policy for similar
benefits to the extent such time was spent under the original policy.
(d) Solicitations other than
direct response. Upon determining that a sale will involve replacement, an
insurer or its agent, other than an insurer using direct response solicitation
methods, shall furnish the applicant, prior to issuance or delivery of the
individual long-term care insurance policy, a notice regarding replacement of
accident and sickness or long-term care coverage. One copy of such notice shall
be retained by the applicant and an additional copy signed by the applicant
shall be retained by the insurer. The required notice shall be provided in the
following form:
NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL
ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
(Insurance company's name and address)
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
According to (your application) (information you have
furnished), you intend to lapse or otherwise terminate existing accident and
sickness or long-term care insurance and replace it with an individual
long-term care insurance policy to be issued by (company name) Insurance
Company. Your new policy provides 30 days within which you may decide, without
cost, whether you desire to keep the policy. For your own information and
protection, you should be aware of and seriously consider certain factors which
may affect the insurance protection available to you under the new policy.
You should review this new coverage carefully, comparing it
with all accident and sickness or long-term care insurance coverage you now
have, and terminate your present policy only if, after due consideration, you
find that purchase of this long-term care coverage is a wise decision.
STATEMENT TO APPLICANT BY AGENT (BROKER OR OTHER
REPRESENTATIVE):
(Use additional sheets, as necessary.)
I have reviewed your current medical or health insurance
coverage. I believe the replacement of insurance involved in this transaction
materially improves your position. My conclusion has taken into account the
following considerations, which I call to your attention:
1. Health conditions which you may presently
have (preexisting conditions), may not be immediately or fully covered under
the new policy. This could result in denial or delay in payment of benefits
under the new policy, whereas a similar claim might have been payable under
your present policy.
2. State law
provides that your replacement policy or certificate may not contain new
preexisting conditions or probationary periods. The insurer will waive any time
periods applicable to preexisting conditions or probationary periods in the new
policy (or coverage) for similar benefits to the extent such time was spent
(depleted) under the original policy.
3. If you are replacing existing long-term
care insurance coverage, you may wish to secure the advice of your present
insurer or its agent regarding the proposed replacement of your present policy.
This is not only your right, but it is also in your best interest to make sure
you understand all the relevant factors involved in replacing your present
coverage.
4. If, after due
consideration, you still wish to terminate your present policy and replace it
with new coverage, be certain to truthfully and completely answer all questions
on the application concerning your medical health history. Failure to include
all material medical information on an application may provide a basis for the
company to deny any future claims and to refund your premium as though your
policy had never been in force. After the application has been completed and
before you sign it, reread it carefully to be certain that all information has
been properly recorded.
(Signature of Agent, Broker or Other Representative) (Typed
Name and Address of Agent or Broker)
The above "Notice to Applicant" was delivered to me on:
(Date)
(Applicant's Signature)
(e) Direct response solicitations. Insurers
using direct response solicitation methods shall deliver a notice regarding
replacement of accident and sickness or long-term care coverage to the
applicant upon issuance of the policy. The required notice shall be provided in
the following form:
NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND
SICKNESS OR LONG-TERM CARE INSURANCE
(Insurance company's name and address)
SAVE THIS NOTICE! IT MAY BE
IMPORTANT TO YOU IN THE FUTURE.
According to (your application) (information you have
furnished), you intend to lapse or otherwise terminate existing accident and
sickness or long-term care insurance and replace it with the long-term care
insurance policy delivered herewith issued by (company name) Insurance Company.
Your new policy provides 30 days within which you may decide, without cost,
whether you desire to keep the policy. For your own information and protection,
you should be aware of and seriously consider certain factors which may affect
the insurance protection available to you under the new policy.
You should review this new coverage carefully, comparing it
with all accident and sickness or long-term care insurance coverage you now
have, and terminate your present policy only if, after due consideration, you
find that purchase of this long-term care coverage is a wise decision.
1. Health conditions which you may presently
have (preexisting conditions), may not be immediately or fully covered under
the new policy. This could result in denial or delay in payment of benefits
under the new policy, whereas a similar claim might have been payable under
your present policy.
2. State law
provides that your replacement policy or certificate may not contain new
preexisting conditions or probationary periods. Your insurer will waive any
time periods applicable to preexisting conditions or probationary periods in
the new policy (or coverage) for similar benefits to the extent such time was
spent (depleted) under the original policy.
3. If you are replacing existing long-term
care insurance coverage, you may wish to secure the advice of your present
insurer or its agent regarding the proposed replacement of your present policy.
This is not only your right, but it is also in your best interest to make sure
you understand all the relevant factors involved in replacing your present
coverage.
4. (To be included only
if the application is attached to the policy.) If, after due consideration, you
still wish to terminate your present policy and replace it with new coverage,
read the copy of the application attached to your new policy and be sure that
all questions are answered fully and correctly. Omissions or misstatements in
the application could cause an otherwise valid claim to be denied. Carefully
check the application and write to (company name and address) within 30 days if
any information is not correct and complete, or if any past medical history has
been left out of the application.
(Company Name)
(f) Where replacement is intended, the
replacing insurer shall notify, in writing, the existing insurer of the
proposed replacement. The existing policy shall be identified by the insurer,
name of the insured and policy number or address including zip code. Such
notice shall be made within five working days from the date the application is
received by the insurer or the date the policy is issued, whichever is sooner.
(g)
(1) Every insurer shall maintain records for
each agent of the agent's amount of replacement sales as a percent of the
agent's total annual sales and the amount of lapses of long-term care insurance
policies sold by the agent as a percent of the agent's total annual sales.
(2) Each insurer shall, by June 30
of each year, report to the commissioner the names and addresses of the ten
percent of its agents with the greatest percentages of lapses and replacements
as measured by subsection (1) above.
(3) Reported replacement and lapse rates do
not alone constitute a violation of insurance laws or imply wrongdoing. The
reports are for the purpose of monitoring agent activities regarding the sale
of long-term care insurance.
(4)
Every insurer shall, by June 30 of each year, report to the commissioner the
number of lapsed policies as a percent of its total number of policies sold and
as a percent of its total number of policies in force as of the end of the
preceding calendar year.
(5) Every
insurer shall, by June 30 of each year, report to the commissioner the number
of replacement policies sold as a percent of its total number of policies sold
and as a percent of its total number of policies in force as of the preceding
calendar year.
(6) For purposes of
this section of this regulation, "policy" shall mean only long-term care
insurance and "report" means on a statewide basis.
