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3 consumer rep worries about an LTCI education tool

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State insurance regulators want to update a document that helps consumers decide whether long-term care insurance (LTCI) suits their needs.

The Senior Issues Task Force, an arm of the National Association of Insurance Commissioners (NAIC), is revising the Long-Term Care Insurance Personal Worksheet.

See also: Consumer rep raises LTCI disclosure concerns

The NAIC is a trade group for regulators. It cannot change state insurance policies directly itself, but states can choose to use NAIC model laws, regulations, bulletins and other materials as the basis for their own insurance rules. States can also choose to have changes in some NAIC standards take effect in their jurisdictions automatically.

The long-term care insurance (LTCI) worksheet was part of an NAIC LTCI model regulation approved in 2002. In states that use the worksheet, an agent is supposed to have an LTCI applicant fill out the worksheet and return the worksheet to the LTCI issuer, to verify that the LTCI product involved appears to be suitable for that applicant. 

A subgroup of the Seniors Task Force recently posted two proposed revisions of the model worksheet on its section of the NAIC’s website.

A Florida insurance regulator marked up the worksheet and focused mainly on formatting changes. The regulator suggested, for example, that the task force should decide whether to spell “long-term care” with a hyphen between “long” and “term” or without, and to stick with that style consistently throughout the worksheet.

Bonnie Burns of California and Brenda Cude of Georgia, two of the people picked by the NAIC to represent consumer interests in NAIC proceedings, wanted more changes.

For a look at some of the changes they proposed, read on.

Introduction to the worksheet

1. The consumer reps say the introduction seems to be aimed at consumers who have not yet thought much about whether they should buy LTCI.

The reps note that the consumers filling out the worksheets have already shopped for LTCI and think they may have found the right policy.

“They’ve made a psychological commitment to buying long-term care insurance,” the reps say. “It seems the introduction should be about understanding the policy, asking questions, and being realistic about whether they can afford the policy.”

2. The reps call for worksheet drafters to make many changes to improve readability.

The reps say that using contractions may help make the worksheet easier to read, and that consumers may have no idea what terms such as “noncancellable,” “guaranteed renewable,” policy form numbers” or even “policy form” mean.

See also: LTCI rate wiggle room: How much is enough?

If, for example, the worksheet uses the term “guaranteed renewable,” “include a definition ON THE FORM that explains how this information is related to the premium/future costs,” the reps say.

3. The reps wonder if a section talking about an LTCI issuer’s history of rate changes needs updating.

The current version of the worksheet states that the company described in the rate history “has raised its premium rates on this policy form or similar policy forms in the last 10 years.”

“What,” the reps ask, “does that mean in this era, when companies are buying other companies’ blocks of business?”

See also: Groups call for tough LTCI rate rules