Consumer Protections

Consumer Protections

Long term care policies sold after 1996 must meet the consumer protection standards in the law in order to qualify for favorable tax treatment. Some of these protections include:

- Early in the sales process, customers must receive a description of the policy's benefits as well as an explanation of the limitations of the policy, referred to as the "outline of coverage."

- Companies selling policies are prohibited from sales practices that mislead and pressure cutomers.

- Insurance companies must offer each purchaser the option of adding inflation protection to their long term care insurance policy.

In general, policies may not limit coverage based on medical conditions, accidents or type of treatment. However, in some cases, policies are permitted to deny coverage for preexisting conditions or diseases, alcoholism, drug addiction or nervous disorders (except Alzheimer's).

Note: A policy cannot exclude coverage for preexisting conditions for more than six months after the effective date of coverage.

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