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Task Force OKs LTC Nonforfeiture Benefit

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Some regulators want to change nonforfeiture provisions for limited-pay long term care insurance contracts.[@@]

The Life & Health Actuarial Task Force, an arm of the National Association of Insurance Commissioners, Kansas City, Mo., has approved an LTC nonforfeiture proposal here at the NAIC’s spring meeting.

The proposal, which still needs approval from the NAIC’s Senior Issues (B) Task Force, would affect the NAIC’s LTC insurance model regulation and the LTC insurance guidance manual.

Frank Dino, a Florida regulator, developed the proposal.

If the proposal is approved, the NAIC’s LTC model would make insurers selling limited-pay LTC policies offer paid-up benefits to consumers if the consumers had made at least 40% of the required payments.

For consumers who have made enough payments, insurers would calculate the benefits by multiplying 40% by 90% by the stated policy benefits value, Dino said.

In effect, the product would behave as if it were a reduced, paid-up contract, and eligible consumers would end up getting a benefit equal to 36% of the benefit described in the original contract, Dino said.