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11.16 Replacement of Long-Term Care Policies

When recommending the purchase or replacement of a Long-Term Care (LTC) insurance policy, agents must follow established suitability and replacement guidelines. These include the following requirements:

  • Determine appropriateness: The agent must make a reasonable effort to assess whether the recommended LTC policy is suitable for the applicant’s needs and circumstances.
  • Avoid unnecessary replacement: Neither the insurer nor the agent may encourage or complete a replacement that is not in the policyholder’s best interest, including replacing a policy with one that offers reduced benefits or higher premiums.
  • Include replacement disclosure questions: All LTC applications must ask whether the proposed policy is intended to replace any existing Accident, Sickness, or Long-Term Care insurance coverage.
  • Provide required replacement notice: If the transaction involves a replacement, the agent must provide the applicant with a Notice Regarding Replacement of Accident and Sickness or Long-Term Care Coverage. One copy must be given to the applicant, and a signed copy must be retained by the insurer.
  • Waive pre-existing condition waiting periods: When a new LTC policy replaces an existing one, the replacing insurer must waive any pre-existing condition waiting periods that were already satisfied under the prior policy.