Long Term Care Certification Practice Test

What does a guaranteed renewable long-term care policy mean for the insurer?

1. They cannot cancel the policy if premiums are paid

2. They can adjust premiums for any reason

3. They can cancel the policy after one year

4. They cannot adjust premiums on individual policies

The correct answer is: They cannot cancel the policy if premiums are paid

A guaranteed renewable long-term care policy ensures that as long as the policyholder continues to pay their premiums, the insurer cannot cancel the policy. This provides a level of security for the policyholder, knowing that they will retain their coverage regardless of changes in health or age, as long as they meet their premium obligations. This type of policy is designed to protect the insured against the risk of the insurer withdrawing coverage due to changes in the individual's situation or general underwriting criteria. It also means that the insured can rely on their policy remaining in effect, which is especially important for individuals planning for long-term care needs. Furthermore, while the insurer can generally implement rate increases across a block of policies, the guaranteed renewable feature specifically protects the individual policyholder from cancellation, creating a sense of stability.