People buy long-term care insurance for a variety of reasons. These reasons include avoiding spending assets for long-term care, to make sure there are choices regarding the type of care received, to protect family members from having to pay for care, or to decrease the chances of going on Medicaid. However, long-term care insurance can be expensive and is not appropriate for everyone. State law requires the insurance company to ask you to complete this worksheet to help you and the insurance company determine whether you should buy this policy.
PREMIUM
Policy Form Number(s) _____________________
The premium for the coverage you are considering will be [$________ per month, or $________ per year,] [a one-time single premium of $________.]
Type of Policy (noncancellable/guaranteed renewable): ________________________________
[The company cannot raise your rates on this policy.] [The company has a right to increase premiums on this policy form in the future, provided it raises rates for all policies in the same class in this state.] [Insurers shall use appropriate bracketed statement. Rate guarantees may not be shown on this form.]
Note: The insurer shall use the bracketed sentence or sentence applicable to the product offered. If a company includes a statement regarding not having raised rates, it shall disclose the company's rate increases under prior policies providing essentially similar coverage.
RATE INCREASE HISTORY
The company has sold long-term care insurance since [year] and has sold this policy since [year]. [The company has never raised its rates for any long-term care policy it has sold in this state or any other state.] [The company has not raised its rates for this policy form or similar policy forms in this state or any other state in the last 10 years.] [The company has raised its premium rates on this policy form or similar policy forms in the last 10 years. Following is a summary of the rate increase(s).]
QUESTIONS RELATED TO YOUR INCOME
⍽ Income ⍽ Savings ⍽ Family members
[Have you considered whether you could afford to keep this policy if the premiums were raised, for example, by 20%?]
Note: The insurer shall use the bracketed sentence unless the policy is fully paid up or is a noncancellable policy.
What is your annual income? (check one)
⍽ Under $10,000 ⍽ $10,000-20,000 ⍽ $20,000-30,000 ⍽ $30,000-50,000 ⍽ Over $50,000
Note: The insurer may choose the numbers to put in the brackets to fit its suitability standards.
How do you expect your income to change over the next 10 years? (check one)
⍽ No change ⍽ Increase
⍽ Decrease
If you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this policy if the premiums will be more than 7% of your income.
Will you buy inflation protection? (check one) ⍽ Yes ⍽ No
If not, have you considered how you will pay for the difference between future costs and your daily benefit amount?
⍽ From my Income ⍽ From my Savings \ Investments ⍽ My Family will Pay
The national average annual cost of care in [insert year] was [insert $ amount], but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.
What elimination period are you considering? Number of days _______Approximate cost $ _______ for that period of care.
How are you planning to pay for your care during the elimination period? (check one)
⍽ From my Income ⍽ From my Savings \ Investments ⍽ My Family will Pay
QUESTIONS RELATED TO YOUR SAVINGS AND INVESTMENTS
Not counting your home, what is the approximate value of all of your assets (savings and investments)? (check one)
⍽ Under $20,000 ⍽ $20,000-$30,000 ⍽ $30,000-$50,000 ⍽ Over $50,000
How do you expect your assets to change over the next ten years? (check one)
⍽ Stay about the same ⍽ Increase ⍽ Decrease
If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.
Signed:_____________________________ ______________
(Applicant) (Date)
(I explained to the applicant the importance of completing this information.)
Signed:____________________________ _______________
(Agent) (Date)
Agent's Printed Name:_______________________________
Note: In order for us to process your application, please return this signed statement to [name of company], along with your application.
[My agent has advised me that this policy does not appear to be suitable for me. However, I still want the company to consider my application.]
Signed:_____________________________ _______________
(Applicant) (Date)
Ins 3.46 APPENDIX 3
THINGS YOU SHOULD KNOW BEFORE YOU BUY LONG-TERM CARE INSURANCE
[Note: For single premium policies, delete the above bullet; for noncancellable policies, delete the second sentence only.]
Ins 3.46 APPENDIX 4
LONG-TERM CARE INSURANCE SUITABILITY LETTER
Dear [Applicant]:
Your recent application for [long-term care insurance] [insurance for care in a nursing home] [insurance for care at home or other community setting] included a “personal worksheet," which asked questions about your finances and your reasons for buying this coverage. For your protection, state law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.
[Your answers indicate that insurance coverage you applied for may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet “Guide to Long-Term Care" and the page titled “Things You Should Know Before Buying Long-Term Care Insurance." The Wisconsin Office of the Commissioner of Insurance also has information about long-term care insurance and may be able to refer you to a county Benefit specialist or a Senior Health Insurance Information specialist free of charge who can help you decide whether to buy this policy.]
[You chose not to provide any financial information for us to review.]
Note: Choose the paragraph and bracketed sentences in that paragraph that apply.
We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.
If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application, and issue you a policy.
Please check one box and return in the enclosed envelope.
⍽ Yes, [although my worksheet indicates that nursing home only or home health care insurance only insurance may not be a suitable purchase,] I wish to purchase this coverage. Please resume review of my application.
Note: Delete the phrase in brackets if the applicant did not answer the questions about income.
⍽ No, I have decided not to buy a policy at this time.
_______________________________ __________________
(Applicant's Signature) (Date)
Please return to [insurer] at [address] by [date].
Ins 3.46 APPENDIX 5
LONG-TERM CARE INSURANCE POTENTIAL RATE INCREASE
DISCLOSURE FORM
Instructions:
This form provides information to the applicant regarding premium rate schedules, rate schedule adjustments, potential rate revisions, and policyholder options in the event of a rate increase.
Insurers shall provide all of the following information to the applicant:
1. [Premium Rate] [Premium Rate Schedules]: [Premium rate] [Premium rate schedules] that [is][are] applicable to you and that will be in effect until a request is made and [filed] for an increase [is][are] [on the application][$_____])
2. The [premium] [premium rate schedule] for this policy [will be shown on the schedule page of] [will be attached to] your policy.
3. Rate Schedule Adjustments:
The company will provide a description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.) (fill in the blank): __________________.
4. Potential Rate Revisions:
This policy is Guaranteed Renewable. This means that the rates for this policy may be increased in the future. Your rates can NOT be increased due to your increasing age or declining health, but your rates may go up based on the experience of all policyholders with a policy similar to yours.
If you receive a premium rate or premium rate schedule increase in the future, you will be notified of the new premium amount and you will be able to exercise at least one of the following options:
• Pay the increased premium and continue your policy in force as is.
• Reduce your policy benefits to a level such that your premiums will not increase. (Subject to state law minimum standards.)
• Exercise your nonforfeiture option if purchased. (This option is available for purchase for an additional premium.)
• Exercise your contingent nonforfeiture rights.* (This option may be available if you do not purchase a separate nonforfeiture option.)
*Contingent Nonforfeiture
If the premium rate for your policy goes up in the future and you didn't buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here's how to tell if you are eligible:
You will keep some long-term care insurance coverage, if:
Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table and
You lapse (not pay more premiums) within 120 days of the increase.
The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you've paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you've paid, the amount of coverage will be that remaining amount.
Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.
Should you choose this Contingent Nonforfeiture option your policy with this reduced maximum benefit amount will be considered paid up with no further premiums due.
