Illinois Administrative Code › Title 50 - INSURANCE › Part 2012 - LONG-TERM CARE INSURANCE › Exhibit J - Potential Rate Increase Disclosure

Current through Register Vol. 48, No. 28, July 12, 2024
Instructions:
This form provides information to the applicant regarding
				premium rate schedules, rate schedule adjustments, potential rate revisions,
				and policyholder options in the event of a rate increase.
Insurers shall provide all of the following information
				to the applicant:
Long-Term Care Insurance
Potential Rate Increase Disclosure
				Form
1. [Premium Rate] [Premium
			 Rate Schedules]: [Premium rate] [Premium rate schedules] that [is] [are]
			 applicable to you and that will be in effect until a request is made and
			 [filed] [approved] for an increase [is] [are] [on the application] [$
			 ].
2. The [premium] [premium rate
			 schedule] for this policy [will be shown on the schedule page of] [will be
			 attached to] your policy.
3. Rate
			 Schedule Adjustments:
The company will provide a description of when premium rate or
				rate schedule adjustments will be effective (e.g., next anniversary date, next
				billing date, etc.) (fill in the blank):
____________________
4. Potential Rate Revisions:
This policy is Guaranteed Renewable. This means that the rates
				for this product may be increased in the future. Your rates can NOT be
				increased due to your increasing age or declining health, but your rates may go
				up based on the experience of all policyholders with a policy similar to
				yours.
If you receive a premium rate or premium rate schedule increase
				in the future, you will be notified of the new premium amount and you will be
				able to exercise at least one of the following options:
* Pay the increased premium and continue your policy
				in force as is.
* Reduce your policy benefits to a level such that
				your premiums will not increase.
* (Subject to state law minimum standards.)
* Exercise your nonforfeiture option if purchased.
				(This option is available for purchase for an additional premium.)
* Exercise your contingent nonforfeiture rights.*
				(This option may be available if you do not purchase a separate nonforfeiture
				option.)
*
Contingent Nonforfeiture
If the premium rate for your policy goes up in the future and
				you didn't buy a nonforfeiture option, you may be eligible for contingent
				nonforfeiture. Here's how to tell if you are eligible:
You will keep some long-term care insurance coverage,
				if:
* Your premium after the increase exceeds your
				original premium by the percentage shown (or more) in the following table;
				and
* You lapse (not pay more premiums) within 120 days
				of the increase.
The amount of coverage (i.e., new lifetime maximum benefit
				amount) you will keep will equal the total amount of premiums you've paid since
				your policy was first issued. If you have already received benefits under the
				policy, so that the remaining maximum benefit amount is less than the total
				amount of premiums you've paid, the amount of coverage will be that remaining
				amount.
Except for this reduced lifetime maximum benefit amount, all
				other policy benefits will remain at the levels attained at the time of the
				lapse and will not increase thereafter.
Should you choose this Contingent Nonforfeiture option, your
				policy, with this reduced maximum benefit amount, will be considered "paid-up"
				with no further premiums due.
Example:
* You bought the policy at age 65 and paid the
				$1,000 annual premium for 10 years, so you have paid a total of $10,000 in
				premium.
* In the eleventh year, you receive a rate increase
				of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the
				policy (not pay any more premiums).
* Your paid-up policy benefits are $10,000 (provided
				you have at least $10,000 of benefits remaining under your policy.)
Contingent
						  Nonforfeiture
Cumulative Premium Increase over
						  Initial Premium
That qualifies for Contingent
						  Nonforfeiture
(Percentage increase is cumulative from
						  date of original issue.
It does NOT represent a one-time
						  increase.)
Issue Age
Percent Increase Over Initial
						  Premium
54 and under
100%
55-59
90%
60
70%
61
66%
62
62%
63
58%
64
54%
65
50%
66
48%
67
46%
68
44%
69
42%
70
40%
71
38%
72
36%
73
34%
74
32%
75
30%
76
28%
77
26%
78
24%
79
22%
80
20%
81
19%
82
18%
83
17%
84
16%
85
15%
86
14%
87
13%
88
12%
89
11%
90 and over
10%
[The following contingent nonforfeiture disclosure need only be
				included for those limited pay policies to which Section
				2012.127(d)(3)
				and (d)(5) are applicable.]
In addition to the contingent nonforfeiture benefits described
				in this Exhibit, the following reduced paid-up contingent nonforfeiture benefit
				is an option in all policies that have a fixed or limited premium payment
				period, even if you selected a nonforfeiture benefit when you bought your
				policy. If both the reduced paid up benefit AND the contingent benefit
				described are triggered by the same rate increase, you can choose either of the
				two benefits.
You are eligible for the reduced paid-up contingent
				nonforfeiture benefit when all three conditions shown below are met:
1. The premium you are required to pay after
			 the increase exceeds your original premium by the same percentage or more shown
			 in the following chart:
Triggers for a Substantial Premium
						  Increase
Issue Age
Percent Increase Over Initial
						  Premium
Under 65
50%
65-80
30%
Over 80
10%
2. You
			 stop paying your premiums within 120 days after the premium increase took
			 effect; AND
3. The ratio of the
			 number of months you already paid premiums is 40% or more than the number of
			 months you originally agreed to pay.
If you exercise this option, your coverage will be converted to
				reduced paid-up status. That means there will be no additional premiums
				required. Your benefits will change in the following ways:
a. The total lifetime amount of benefits your
			 reduced paid-up policy will provide can be determined by multiplying 90% of the
			 lifetime benefit amount at the time the policy becomes paid up by the ratio of
			 the number of months you already paid premiums to the number of months you
			 agreed to pay them.
b. The daily
			 benefit amounts you purchased will also be adjusted by the same
			 ratio.
If you purchased lifetime benefits, only the daily benefit
				amounts you purchased will be adjusted by the applicable ratio.
Example:
* You bought the policy at age 65 with an annual
				premium payable for 10 years.
* In the sixth year, you receive a rate increase of
				35% and you decide to stop paying premiums.
* Because you have already paid 50% of your total
				premium payments and that is more than the 40% ratio, your paid-up policy
				benefits are .45 (.90 times .50) times the total benefit amount that was in
				effect when you stopped paying your premiums. If you purchased inflation
				protection, it will not continue to apply to the benefits in the reduced
				paid-up policy.