Consumer Protections

Any long-term care policy purchased today that is federally tax qualified must meet numerous consumer protection standards set by the federal government. For example, qualified policies:

  • May not limit or exclude coverage by type of illness, such as Alzheimer's disease.
  • Cannot increase premiums due to age.
  • Cannot be canceled because of age or because your health deteriorates.
  • Must offer a nonforfeiture benefit. If purchased, this benefit ensures that if you cancel your policy or let it lapse, some portion of your benefits will still be available to you for a certain period of time.
  • Must offer an inflation protection benefit. If purchased, this benefit ensures that your benefits will keep pace with inflation -- particularly important for those who plan for the future by purchasing a policy at a younger age.

In addition, all long-term care insurance policies must meet consumer protection standards set by the state in which they are sold. Most states also offer a free-look period (usually 30 days) following a purchase. During that time, you have the right to review your contract and return it if you think you made the wrong choice. If you decide not to keep the policy, the insurer will cancel it and give you an appropriate refund.