SCC protects consumers from unintentional lapses of long-term care insurance policies

healthcareThe Bureau of Insurance of the State Corporation Commission is encouraging long-term care insurance policyholders in Virginia to take advantage of revised regulatory requirements that strengthen protections against unintentional lapses in coverage due to nonpayment of their premiums.

While long-term care insurers in Virginia have long been required to provide policyholders with the option to designate a third party to receive notice of an impending policy lapse, the verification of delivery of such notice has been strengthened in accordance with regulatory revisions recently adopted by the Commission.

Effective January 1, 2015, long-term care insurers will be required to retain written receipt evidencing mailing of the notice to the designated individuals. The insurers also must retain evidence of the mailing of the notice for at least three years following the date of mailing.

The notice of lapse or termination of the policy for nonpayment of a premium is required to be sent at least 30 days prior the effective date of such lapse or termination. The notice will be sent to the insured and the person designated by the insured to also receive such notice.

Long-term care insurance policies are designed to assist aging individuals with some or all of the costs of medical and personal care provided in the home, an assisted living facility, a nursing home, or through a community program such as adult day-care. Typically purchased several years before such services are needed, a person’s ability to be cognizant of the financial obligation to pay premiums may decline with age.

Designating a back-up person to receive notice of a pending lapse in coverage helps protect policyholders from accidental lapses or even termination of coverage. The new proof-of-mailing provisions will assist the SCC’s Bureau of Insurance in determining whether a notice of lapse or termination was properly sent by the insurance company.

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