I am often asked:
- Can my long-term care policy be cancelled when I reach a certain age?
- Can my long-term care policy be cancelled because my health changes?
- Can my long-term care policy be cancelled if I make too many claims?
- Can my long-term care policy be cancelled if the insurance company sells my policy to another insurance company?
- Can my long-term care policy be cancelled if my insurance company stops selling new long-term care policies?
The answer to all of these questions is: NO.
Every long-term care insurance policy is “guaranteed renewable”. That means that state law requires the insurance company to renew your policy every time you pay your premium. You are guaranteed to have your policy renewed and remain in-force, every time you pay the premium.
The insurance company cannot cancel your policy. The only way that an insurance company can fail to renew your long-term care policy is if you fail to pay the premium in a timely manner.
Most long-term care policies have consumer protection features to help ensure that you pay your premium on time and keep your policy in-force, even if your premium is past due. Here are the 4 most common consumer protection features:
- 31 day grace period
- 3rd Party Notification
- Policy Re-instatement up to 6 months after lapse due to cognitive or physical impairment
- Convenient payment methods
31-day Grace Period: Every long-term care policy has a “grace period”. Most states require that you be given 31 days of grace to pay your LTC policy’s premium after the due date. Some of the leading long-term care policies go beyond the state requirements and have 65-day grace periods.
3rd Party Notification: Federal law requires that all policies that meet the federal guidelines (i.e. tax-qualified policies) allow for you to designate other people (e.g. friends, family, etc…) to be notified if your premium is past due. With most policies you can designate as many as 3 other people to be notified if your premium is past due and your LTC policy is in danger of lapsing.
Policy Re-instatement: With most policies, if you become cognitively or physically impaired and your impairment prevents you from paying your premium on-time, your policy can be re-instated up to 6 months after it has lapsed.
Credit Card/EFT/Pay-by-phone: Most of the leading long-term care insurers allow for convenient payment methods, including most types of credit cards, electronic funds transfer, and even pay-by-phone. (Some states do not allow credit card payments, but most do.)