11 NCAC 12 .1010             REQUIREMENTS FOR REPLACEMENT

(a)  Individual and direct response solicited long‑term care insurance application forms shall include a question designed to elicit information as to whether the proposed policy is intended to replace any other accident and health or long‑term care insurance policy presently in force.  A supplementary applicant or other form to be signed by the applicant containing such a question may be used.

(b)  Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods, or its agent, shall furnish the applicant, prior to issuance or delivery of the individual policy, a notice regarding replacement of accident and health or long‑term care coverage.  One copy of such notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer.  The required notice shall be provided in the following manner:

 

"NOTICE TO APPLICANT REGARDING REPLACEMENT

OF INDIVIDUAL ACCIDENT AND HEALTH OR LONG‑TERM CARE INSURANCE

 

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and health or long‑term care insurance and replace it with an individual long‑term care insurance policy to be issued by [company name].  Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy.  For your own information and protection, you should be aware of and seriously consider certain factors that may affect the insurance protection available to you under the new policy.

 

You should review this new coverage carefully, comparing it with all accident and sickness or long‑term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long‑term care coverage is a wise decision.

 

I have reviewed your current medical or health insurance coverage.  I believe the replacement of insurance involved in this transaction materially improves your position.  My conclusion has taken into account the following considerations, which I call to your attention:

1.  Health conditions that you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy.  This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2.  State law provides that your replacement policy or certificate may not contain new pre‑existing conditions or probationary periods.  The insurer will waive any time periods applicable to pre‑existing conditions or probationary periods in the new policy or certificate for similar benefits to the extent such time was spent under the original plan.

3.  You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy.  This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

4.  If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history.  Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force.  After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.

 

____________________________________________________________________________

(Signature of Agent, Broker or Other Representative) 

 

The above Notice to Applicant was delivered to me on:

 

______________________________________________    

(Date)    

 

______________________________________________    

(Applicant's Signature)       "

 

(c)  Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and health or long‑term care coverage to the applicant upon issuance of the policy.  The required notice shall be provided in the following manner:

 

"NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND HEALTH OR LONG‑TERM CARE INSURANCE

 

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and health or long‑term care insurance and replace it with the long‑term care insurance policy delivered with this notice and issued by [company name].  Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy.  For your own information and protection, you should be aware of and seriously consider certain factors that may affect the insurance protection available to you under the new policy.

 

You should review this new coverage carefully, comparing it with all accident and sickness or long‑term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long‑term care coverage is a wise decision.

1.  Health conditions that you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy.  This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2.  State law provides that your replacement policy or certificate may not contain new pre‑existing conditions or probationary periods.  The insurer will waive any time periods applicable to pre‑existing conditions or probationary periods in the new coverage for similar benefits to the extent such time was spent under the original policy.

3.  You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy.  This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

4.  [To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly.  Omissions or misstatements in the application could cause an otherwise valid claim to be denied.  Carefully check the application and write to [company name and address] within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.

 

 

________________________________________

(Company Name)               "

 

(d)  When replacement is intended, the replacing insurer shall give written notice of the proposed replacement to the existing insurer.  The existing policy shall be identified by the insurer, name of the insured, and policy number or address, including zip code.  This notice shall be made within five business days after the date the application is received by the insurer or the date the policy is issued, whichever date is sooner.

(e)  The application shall include questions designed to elicit information as to whether or not another policy is intended to be replaced.

 

History Note:        Authority G.S. 58‑2‑40(1); 58‑55‑30(a);

Eff. September 1, 1990;

Amended Eff. December 1, 1992.