Insurance Model Act
The Insurance Model Act, formerly known as the Long-Term Care Insurance Model Act is a model state law developed by the National Association of Insurance Commissioners (NAIC). The Act was created by NAIC to assist states in developing their own laws regarding the insurance industry by setting standards and encouraging state-to-state uniformity.
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Renewability
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The Long-Term Care Insurance Model Act is guaranteed under a renewable contract which prevents a medical or health policy already in place being canceled due to medical or health issues. In other words, an insured person cannot lose his long-term health care policy due to medical conditions as long as he pays the premium on time. Under this provision, the insured also can not be asked or required to submit to another medical exam that can determine eligibility or change premiums and coverage.
Premiums
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An insurance premium is the amount paid on the insurance policy. The Long-Term Care Insurance Model Act limits the amount of premium a carrier can attach to its insurance policy. The act's provisions also prevent a carrier for increasing premiums because an insured person is over the age of 65. Through the act, premiums only can be changed to reflect changes in coverages or benefits but the change in premium must only adjust to reflect the changes in coverage.
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Exclusions
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The Long-Term Care Insurance Model Act prevents an insurer from denying coverage to an individual based on his current health issues or history of health issues, often referred to as pre-existing conditions. While the insurer can charge higher premiums because of pre-existing conditions, such as alcoholism and terminal illness, the insurer cannot deny coverage.
Benefits
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The Long-Term Care Insurance Model sets minimum standards within the insurance industry. Through the act, states can adopt uniform minimum standards for policy coverage of insurers. The act also creates standards for nursing and custodial care of patients and ensures that all eligible individuals are not turned away from coverage based on factors out of their control.
"Free-Look"
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Through the Long-Term Care Insurance Model Act, an individual who purchases insurance has a designated period of time, typically 10 days, to thoroughly review the policy and determine if he wants to keep the coverage. At the end of the "free-look" period, the policy holder can cancel or decline coverage without penalty. If canceled, the insurer must return all premiums paid by the individual.
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