What does “Guaranteed Renewable” mean in a long-term care insurance policy?
Guaranteed Renewable =
When a policy cannot be canceled by an insurance company and must be renewed when it expires unless benefits have been exhausted. The company cannot change the coverage or refuse to renew the coverage for other than nonpayment of premiums (including health conditions and/or marital or employment status.) any guaranteed renewable policy, the insurance company may increase premiums, but only on an entire class of policies, not just on your policy.
What happens to LTC policies that are guaranteed renewable for life when the company leaves the LTC business after I’ve had their policy for 15 or 20 years and now I need the benefits? What happens if the insurance company I bought a LTC policy from goes bankrupt at some point in the future? Will I have any benefits or just be out of luck?
Hi Dave,
Thank you for your questions. We will answer them one at a time:
Question: “What happens to LTC policies that are guaranteed renewable for life when the company leaves the LTC business after I’ve had their policy for 15 or 20 years and now I need the benefits?”
Answer: As long as you pay your premium on time, your policy will remain in-force and any claims you make on your policy will be honored. An insurance company cannot unilaterally decide to not honor your policy. Even if the insurance company is not selling new LTCi policies, they are still required by law to pay the claims of every LTCi policy they have ever sold. You can read more about this at this link:
Question: “What happens if the insurance company I bought a LTC policy from goes bankrupt at some point in the future? Will I have any benefits or just be out of luck?”
Answer: Many companies that sell long-term care insurance have been in business for 100+ years. It’s very rare for a life insurance company to go bankrupt. However, to protect policyholders who have purchased policies from weaker insurance companies, each state has set up a “guaranty fund” into which every insurance company must contribute. Below is a link to the website for Wisconsin’s guaranty association. Question 19 asks, “Is long-term-care insurance covered by the guaranty association?” The answer is: Yes, long-term-care insurance is typically considered health insurance and covered by the guaranty association. Here is that link:
Thank you again for your questions.
Sincerely,
LTCFacts.org