Chapter 13: Long Term Care Provisions, Disclosures and Marketing

Question 1

LTC policyholders must be provided with a ___ ___ free look period, and cannot restrict coverage to only _____ care.

Answer 1

30 day
skilled

Question 2

Applicants must be provided with a ____ ____ (outline of coverage) prior to completing the policy application

Answer 2

shopper’s guide

Question 3

The _____ ____ explains policy features such as premiums, policy renewability, conversion, and exclusions.

Answer 3

shopper’s guide

Question 4

If an LTC policy is purchased in combination with a life insurance policy, then a ____ _____ must be provided with the shopper’s guide. This document details how life insurance benefits are affected by utilization of LTC benefits (i.e., accelerated benefits, cash values, death benefit).

Answer 4

policy summary

Question 5

TF: LTC policies are either:

Guaranteed renewable or
Noncancellable.

Answer 5

True

Question 6

TF Insurers are permitted nonrenew or cancel an LTC policy on the basis of the insured’s deteriorated health or advanced age.

Answer 6

False - cant do it!

Question 7

TF: Policies can only be canceled for nonpayment of premium.

Answer 7

True

Question 8

TF: LTC premiums are based on several factors.

The younger an applicant is upon purchase, the lower the premium.
Policies with longer elimination periods have lower premiums.
Policies with longer benefit periods have higher premiums.
An applicant who has difficulty performing some ADLs upon application will have a higher premium.
Loss ratios must be at least 60% for individual LTC policies.

Answer 8

True

Question 9

Many LTC policies do not cover pre-existing conditions that were present ___ ____ prior to the policy’s effective date.

Answer 9

6 months

Question 10

____ ____ after the effective date of coverage, all pre-existing conditions must be covered.

Answer 10

6 months

Question 11

TF: Following are a list of common exclusions found in LTC policies:

Pre-existing conditions
Injuries due to war or acts of war
Self-inflicted injuries including attempted suicide
Mental illnesses; however, Alzheimer’s disease is covered
Alcoholism or drug dependencies
Treatments provided by Workers’ Compensation, Medicare, veteran’s hospital, etc.

Answer 11

True

Question 12

Many LTC policies have an elimination period similar to that found in a disability income policy, after which LTC benefits begin.

The elimination period is usually ____ ____ or longer, during which period the insured must be confined to a nursing facility.
The elimination period could be as little as ____ to as much as _____ days
LTC policies with longer elimination periods have _____ premiums

Answer 12

30 days
0 days
365 days
lower

Question 13

A ____-_____ elimination period means that only the days when the insured actually receives care count towards the elimination period requirement. In contrast, a _____-______ elimination period means that the elimination period begins the day the insured goes on claim and continues to run regardless of whether services are provided.

Answer 13

service-day
calendar day

Question 14

A _____-day elimination period is more favorable to the insured.

Answer 14

Calendar

Question 15

The ____ of ____ provision waives premiums while an insured is receiving LTC benefits. After a specified time period, such as 90 or 180 days of confinement, premiums are waived. After the insured ceases LTC, premium payments resume.

Answer 15

waiver of premium

Question 16

TF: Qualified LTC plans are treated like medical expense policies, and because they are tax-qualified, premiums can be deducted as a business expense for plans sponsored by employers.

Answer 16

True

Question 17

TF: Individually owned qualified LTC plan premiums can be deducted based on age. Benefits are not taxable.

Answer 17

True

Question 18

TF: A LTC policy must meet the following qualifications to be defined as a qualified LTC plan:

Individual must be unable to perform at least two ADLs
Must be severely cognitively impaired
Individual must require LTC for at least 90 days
A plan of care for the individual must be provided by a physician or other licensed medical practitioner
Coverage cannot reimburse insureds for medical expenses or services covered by Medicare
Nonforfeiture options and inflation protection must be provided
Policies cannot accrue cash value

Answer 18

True

Question 19

TF: Individuals who are over the age of 80 applying for an LTC policy must:

Undergo a physical exam,
Undergo an ADL evaluation,
Provide medical records and
Provide an attending physician’s statement.

Answer 19

True

Question 20

TF: Post-claims underwriting, in which all applicants are issued coverage, but later denied claims for health or other reasons, is prohibited in LTC policies.

Answer 20

True

Question 21

Individuals who are insured under group LTC coverage must be provided with the right to convert to individual LTC coverage upon termination of group coverage (unless termination is due to nonpayment of premium) without needing to provide _____ of _____

Answer 21

Evidence of insurability

Question 22

Individuals must apply for the individual coverage and pay the premium within ___ ____ of the group coverage termination date.

Answer 22

31 days

Question 23

An elimination period for long-term care policies that is counted based on the number of days the insured receives care is called:
Select one:
a. Service day basis.
b. Calendar day basis.
c. Long-term care basis.
d. Medicare basis.

Answer 23

A

Question 24

Which of the following is not a requirement for qualified long-term care plans?
Select one:
a. Policies must accrue cash value.
b. Inflation protection must be provided.
c. The individual must be unable to perform at least 2 ADLs.
d. Coverage cannot reimburse insureds for medical expenses or services covered by Medicare.

Answer 24

A

Question 25

Long-term care policies must be at least:
Select one:
a. Cancelable
b. Conditionally renewable
c. Guaranteed renewable
d. Optionally renewable

Answer 25

C

Question 26

How long is the conversion period for group long-term care policies?
Select one:
a. 31 days
b. 60 days
c. 90 days
d. 180 days

Answer 26

A

Question 27

A long-term care insurance policy must contain which of the following provisions?
Select one:
a. Coverage for drug and alcohol dependency
b. Probationary period of no longer than 180 days
c. Coverage for conditions that result from war
d. Guaranteed renewability

Answer 27

D

Question 28

Which of the following provisions must be included in a long-term insurance policy?
Select one:
a. Probationary period of no longer than 180 days
b. Guaranteed renewability
c. Surgical fees
d. Coverage for drug dependency

Answer 28

B

Question 29

In a long-term care policy, pre-existing conditions must be covered after:
Select one:
a. 6 months from the effective date of coverage
b. 12 months from the effective date of coverage
c. 18 months from the effective date of coverage
d. 24 months from the effective date of coverage

Answer 29

A

Question 30

Which of the following is not an optional benefit provided by LTC policies?
Select one:
a. Guaranteed insurability
b. Nonforfeiture options
c. Inflation protection
d. Guaranteed renewable or noncancelable

Answer 30

D - this is confusing, BUT think like this. It asks which is NOT an OPTIONAL benefit? answer D is NOT optional…it is required!

Question 31

Long-term care policies contain all of the following provisions, EXCEPT:
Select one:
a. 30-day free look period
b. Restricted coverage to skilled care only
c. Shopper’s guide provided to applicants prior to completing the policy application
d. Policy summary provided if a long-term care policy is purchased with a life insurance policy

Answer 31

B

Question 32

All the following exclusions are permitted in a long-term care insurance policy, EXCEPT:
Select one:
a. Self-inflicted injuries
b. Drug addiction
c. Alzheimer’s disease
d. Participation in a felony

Answer 32

C

Question 33

TF: Alzheimer’s disease can be excluded from LTC coverage.

Answer 33

False - it can NOT be excluded from an LTC policy!

Question 34

TF:When soliciting insurance policies to seniors, insurance professionals must take care to follow specific regulations:

The agent must provide a full explanation of the policy benefits on a company approved form or other approved format.
The agent must fully explain any overlapping coverage that the policy being discussed might create.
The agent must have the prospective insured sign a statement acknowledging that the required information and disclosures were provided.

Answer 34

True

Question 35

TF: Agents must do their best to assure that the applicant is purchasing coverage that suits their needs, and does not duplicate existing coverage.

Keep in mind that it is illegal to sell a Medicare Supplement policy to an individual who already has one.

Answer 35

True

Question 36

For replacement transactions involving LTC and Medicare Supplement policies, the agent must provide the applicant a _____ _____ _____, which explains the replacing coverage in comparison to the existing coverage. Included in the Notice, the applicant must be provided a 30-day free look period for the replacing coverage.

Answer 36

Notice Regarding Replacement

Question 37

TF: 30 Day = Free Look for LTC Replacements

Answer 37

True

Question 38

TF: In the transaction of LTC or Medicare Supplement policies, agents cannot use:

Twisting,
High pressure tactics, or
Cold lead advertising.

Answer 38

True

Question 39

For the first year’s commission, insurers may not pay agents more than _____ of the renewal commission for the second year.

Answer 39

200%

Question 40

What is the required free look period for replacement long-term care policies?
Select one:
a. 10 days
b. 20 days
c. 30 days
d. 60 days

Answer 40

C

Question 41

An insurance producer suggests to a client, Jim, that he purchase a second Medicare supplement policy in order to provide coverage for all his medical costs. Which of the following best describes this offer?
Select one:
a. Advisable, since growing medical costs quickly deplete the means of people on fixed incomes
b. Advisable since current medical expenses can never be covered by Medicare and one supplement alone
c. A matter of judgment, since the client currently has several levels of coverage for health care costs
d. Illegal, since the sale of a supplement that provides the client with more than one Medicare supplement is prohibited by law

Answer 41

D

Question 42

Agents selling long-term care and Medicare supplement policies may not use the following practices, EXCEPT:
Select one:
a. Twisting
b. Replacement
c. Cold lead advertising
d. High pressure tactics

Answer 42

B

Question 43

When soliciting insurance policies to seniors, insurance professionals must take care to:
Select one:
a. Provide a full explanation of policy benefits
b. Fully explain any overlapping coverage
c. Have the prospective insured sign a statement acknowledging that the required information and disclosures were provided
d. All of the above

Answer 43

D

Question 44

Which of the following is the permitted compensation arrangement for agents’ first year commission on LTC and Medigap policies?
Select one:
a. 200% of the renewal commission for the second year
b. 400% of the renewal commission for the third year
c. 100% of the renewal commission for the second year
d. 200% of the renewal commission for the third year

Answer 44

A