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Advocate wants NAIC to study life-LTC hybrid disclosures

By Allison Bell

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A longtime consumer advocate says it may be time for state insurance regulators to look at consumer protections and disclosure requirements for life and annuity products that include long-term care (LTC) benefits.

Bonnie Burns, a consumer representative at California Health Advocate, talks about LTC hybrid requirements in a comment on a review of the consumer disclosures section of the Model Act for Long-Term Care Insurance.

The National Association of Insurance Commissioners (NAIC) developed the model. A subgroup at the NAIC’s Senior Issues Task Force is conducting the review.

Some brokers have concerns about the design of hybrid products and agent knowledge of the products as well as hybrid product disclosure rules, Burns writes in the comment letter.

Burns notes that many of the products combine LTC benefits with universal life or whole life coverage.

The NAIC’s long-term care insurance (LTCI) model exempts life products from some requirements, and it leaves out some provisions that might be unique to life products, Burns says.

“It would be helpful to have a side by side listing of the requirements and consumer protection of those models to ensure that combination products include the full range of protections that a stand-alone product provides and that there are no gaps between the two sets of regulations,” Burns says.

One issue is that consumers may not understand the costs or charges applied to a life product, and that may continue or start when LTC benefits payments begin, Burns says.

Issuers may also need to improve the way they disclose any hybrid product features that increase the LTC benefits beneficiaries can get over time, and how the level of benefits available relates to the likely cost of care, Burns says.

The existing Buyers Guide for Life Insurance does not refer to life policy LTC benefits or LTC-related benefits triggers, Burns says.

See also: Groups call for tough LTCI rate rules