North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-06 - Accident and Health Insurance › Chapter 45-06-05.1 - LONG-TERM CARE INSURANCE MODEL REGULATION › Appendix F - Potential Rate Increase Disclosure Form

Current through Supplement No. 393, July, 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 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
				  CANNOT 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 did not buy a nonforfeiture option, you may be eligible for contingent
				  nonforfeiture. Here is 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 have 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
Percentage Increase OveInitial Premium
29 and under
200%
30-34
190%
35-39
170%
40-44
150%
45-49
130%
50-54
110%
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 subdivisions d and f of
				  subsection 4 of section 45-06-05.1-24 are applicable.]
In addition to the contingent nonforfeiture benefits
				  described above, 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 above 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 chart
				  below:
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 of when 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.