Chapter 6: LTCI underwriting and claims

Question 1

What is morbidity?

Answer 1

The likelihood of an applicant becoming disabled

Question 2

When underwriting an immediate need annuity, the main focus is on the applicant’s:

Answer 2

mortality

Question 3

When underwriting a pre-funded LTCI, the main focus is on the applicant’s:

Answer 3

morbidity

Question 4

Which type of LTCI does NOT typically offer assistive devices?

Answer 4

Immediate need annuity.

Question 5

Benefit of a common personal questionnaire?

Answer 5

Results in a quicker and simplified application process, as doctors and care homes do not have to simultaneously complete a number of different reports for the same applicant where more than one application is made

Question 6

What is a Private medical attendant’s report?

Answer 6

May also be known as a general practitioner’s report (GPR). These are completed by the insured’s doctor and, like PMARs used in life assurance underwriting, are useful in providing the underwriter with the individual’s medical history.

Question 7

When do immediate need annuities typically start to be paid?

Answer 7

After the 30-day cooling off period.

Question 8

LTCI would typically pay a claim on a policy to whom?

Answer 8

registered care provider.

Question 9

When will a medical examination usually be requested?

Answer 9

These are only likely to be requested for pre-funded LTCI. With immediate need LTCI, if required, these will usually be conducted by the care provider

Question 10

Imran has LTCI and his health is deteriorating. To make a claim, he needs to be unable to perform a specified number of ADLs and what?

Answer 10

without the continued assistance of another person, or be mentally impaired.

Question 11

What tests are used in both the treatment of mental health conditions and in underwriting where the answers help to determine the degree of cognitive impairment?

Answer 11

Mini Mental State Examination (MMSE).

ACE-R test.

Question 12

Where a pre-funded LTCI provider needs to obtain a medical examiner’s report, this is most likely to focus on the applicant’s:

Answer 12

ability to cope with ADLs and their cognitive ability.

Question 13

With LTCI, how is ‘cognitive impairment’ typically defined?

Answer 13

A significant loss or deterioration in intellect from an organic cause.

Question 14

A misrepresentation is qualifying if, what?

Answer 14

The misrepresentation was caused by the consumer’s failure to exercise reasonable care or fraud

The insurer shows that without the misrepresentation, it would not have entered into the contract (or agreed to the variation) at all, or would have done so only on different terms.

Question 15

A pre-funded LTCI policy will typically pay out a claim in the event of:

Answer 15

a mental disorder arising from organic brain disease.

Question 16

What is the definition of deliberate or reckless qualifying misrepresentation?

Answer 16

The consumer: knew that it was untrue or misleading, or did not care whether or not it was untrue or misleading.

Or

Knew that the matter to which the misrepresentation related was relevant to the insurer, or did not care whether or not it was relevant to the insurer.

Question 17

What is the remedy for deliberate or reckless qualifying misrepresentation?

Answer 17

The insurer may avoid the contract if a qualifying misrepresentation was deliberate or reckless. In such a case, the insurer need not return any of the premiums paid, except to the extent (if any) that it would be unfair to the consumer to retain them.

Question 18

What is the definition of careless qualifying misrepresentation?

Answer 18

It is not deliberate or reckless

Question 19

What is the remedy for Careless qualifying misrepresentation?

Answer 19

If the insurer would not have entered into the consumer insurance contract on any terms, the insurer may avoid the contract and refuse all claims, but must return the premiums paid.

If the insurer would have entered into the consumer insurance contract, but on different terms (excluding terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms if the insurer so requires.

If the insurer would have entered into the consumer insurance contract (whether the terms relating to matters other than the premium would have been the same or different), but would have charged a higher premium, the insurer may proportionately reduce the amount to be paid on a claim.

Question 20

For a deliberate or reckless qualifying misrepresentation, who is the burden of proof on?

Answer 20

The burden of proof that a qualifying misrepresentation was deliberate or reckless is on the insurer.
It is presumed that:
* the consumer had the knowledge of a reasonable consumer,
* the consumer knew that a matter about which the insurer asked a clear and specific question was relevant to the insurer.

Question 21

Standard exclusions that are applied to pre-funded LTCI claims would include disabilities arising from, what?

Answer 21

• alcohol or drug abuse
• failure to follow medical advice
• self-inflicted injury
• care outside the UK, Isle of Man or Channel Islands.

Question 22

What are the two types of deferred periods?

Answer 22

Standard waiting periods that form part of the contract - two or three months.

Optional deferred periods where the individual elects to wait for, say, two years before benefits are paid because they know they have the personal resources to fund care over the period.