Long-Term Care Equity Protection Act Exposed

The Long-Term Care Equity Protection Act is listed under ALEC's Health and Human Services Task Force and was included in the 1995 ALEC Sourcebook of American State Legislation. ALEC has attempted to distance itself from this piece of legislation after the launch of ALECexposed.org in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Bill Text

Summary

This Act is intended to be introduced in conjunction with the Long-Term Care Insurance Act. Its purpose is to require insurers offering long-term care policies to offer a nonforfeiture provision within the policy. A nonforfeiture provision offers to the consumer a specified value if the long-term care plan should lapse.

ALEC's bill stipulates that each insurer offering a long-term care insurance policy shall offer a nonforfeiture provision. The provision shall be appropriately captioned and shall provide that in the event of default in any premium payment, after premiums have been paid for at least two full years, the insurer shall grant upon proper request a reduced paid-up nonforfeiture benefit on a plan stipulated in the policy. Nonforfeiture values suggested in the model act include one or more of the following:

• A reduced paid up plan;

• An extended term;

• A return of premium; and

• Cash value.

Applicants who decline to have a nonforfeiture provision included in the policy shall sign a separate form indicating their decision to decline the nonforfeiture provision.

Model Legislation

{Title, enacting clause, etc.}

Section 1.

This Act may be cited as Long-Term Care Equity Protection Act.

Each insurer offering a long term care insurance policy shall offer a nonforfeiture provision. The nonforfeiture provision shall be appropriately captioned and shall provide that in the event of default in any premium payment after premiums have been paid for a number of years stipulated in the policy the insurer shall grant upon proper request a nonforfeiture benefit including without limitation one or more of the following:

(a) Reduced paid-up

(b) Extended term

(c) Return of premium

(d) Cash value.

All non-forfeiture benefits shall be determined on the basis of assumptions consistent with those contained in the premium rates charged to the policyholder immediately prior to the date of default and all such benefits shall be of equal value.

Applicants who decline to have a non-forfeiture provision included in the policy that is applied for shall sign a separate form indicating their decision to decline the nonforfeiture provision.

Section 2. {Severability clause.}

Section 3. {Repealer clause.}

Section 4. {Effective date.}

1995 Sourcebook of American State Legislation