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Life Health > Long-Term Care Planning

Woman Sues Genworth Over LTCI Survivorship Benefit

By Allison Bell

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What You Need to Know

  • A husband and a wife had separate policies that each cost $2,610 per year.
  • The survivorship benefit eliminates the need for one spouse to pay the premiums after the other spouse dies.
  • The suit hinges on what accepting a contingent nonforfeiture benefit does to the survivorship benefit.

A new state court suit in Pennsylvania could affect what happens to the features of a long-term care insurance policy when a longtime LTCI policy owner responds to a premium increase announcement by accepting a reduced benefit option.

Rosemary Loring, the widow of David Loring Sr., is suing Genworth Life Insurance Co. over the effects of her late husband’s decision to accept a contingent nonforfeiture benefit on the policy survivorship benefit.

Loring and her husband owned separate LTCI policies that were issued at the same time in 2005. Loring maintains that the survivorship benefit on her husband’s policy should still be in effect and should eliminate the need for her to pay any further premiums for her own LTCI policy, according to the complaint.

Genworth Life has declined to provide the survivorship benefit, saying that the provision does not apply to coverage provided through a contingent nonforfeiture benefit.

Genworth Financial, Genworth Life’s parent company, declined to comment on the suit.

Robert Foster, Rosemary Loring’s attorney, declined to comment on specifics about the case but said he was unaware of other similar cases.

What it means: The Loring case could affect how courts handle LTCI policyholder decisions to accept nonforfeiture benefits on any policy survivorship benefit provision and, possibly, on any other extra benefit provisions bundled into an LTCI policy subject to a premium increase.

The policy: David Loring Sr. started out as an AT&T and Bell Communications Research executive. He and his wife later started Remedy Intelligent Staffing, according to his obituary.

David Loring Sr. bought one LTCI policy for himself in 1998. Later, in 2005, while he and his wife were living in Doylestown, Pennsylvania, they bought two separate policies. Each policy included a survivorship benefit.

David Loring received a notice in 2021 stating that he could lower his premiums on the 2005 policies by accepting a contingent nonforfeiture benefit as a reduced benefit option.

He died Jan. 15, 2023.

The complaint includes a copy of Rosemary Loring’s policy. The policy shows that the couple had a monthly maximum of $6,000, an unlimited lifetime coverage maximum, 5% full compound inflation protection and a 90-day elimination period.

The policy included care coordination services, a home care benefit, a respite care benefit, a caregiver training benefit equal to up to 20% of the monthly maximum and a bed reservation benefit equal to up to 60 policy days per year.

The international coverage benefit was equal to up to 75% of the monthly maximum per calendar month for up to 48 calendar months.

The original annual premium amount was $2,610.

Nonforfeiture benefit: Insurers and insurance regulators developed the nonforfeiture benefit system to help consumers who pay for life insurance coverage or other coverage for many years and then are unable or unwilling to keep making the payments.

A nonforfeiture benefit provision provides some coverage for a policy owner that stops making the premium payments or pays less than the full premium amount.

The suit: Rosemary Loring asserts in her suit that her husband’s 2005 LTCI policy was never on nonforfeiture benefit status because the contingent nonforfeiture was separate from an ordinary nonforfeiture benefit.

An ordinary nonforfeiture benefit provision would apply only if the policy owner simply stopped making the payments, and the policy itself distinguished between a contingent nonforfeiture benefit and an ordinary nonforfeiture benefit in a definition included in the policy, Loring says.

“No document exists that indicates that electing the contingent nonforfeiture benefit would cause a forfeiture of the survivorship benefit,” according to the complaint. “Plaintiff was never provided notice of the change of her husband’s policy nor an opportunity to accept or reject a material alteration to the coverage she continued to pay a premium for.”

In 2023, after a Genworth resolved a class-action suit, Rosemary Long received a new option to convert both her policy and her husband’s policy to paid-up benefit status, and that notice indicated that electing paid-up status would end survivorship rights.

Rosemary Long is asking the court to provide a declaratory judgment that the election of a contingent nonforfeiture benefit is different from continuing coverage under a nonforfeiture benefit and that the survivorship benefit provision is still in effect.

She has accused Genworth Life of bad faith, fraud violation of state unfair trade practices and consumer protection laws and breach of fiduciary duty.

Credit: Shutterstock

Allison Bell

Think_Allison

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