Be Careful of Changes in Insurance Policies and Policy Lapses

White Plains, NY (Law Firm Newswire) March 26, 2014 – It is essential that premiums are paid on time for all types of insurance, and policyholders must ensure that they are aware of any policy changes.

These measures are of particular importance for long-term care insurance.

Long-term care insurance can help with the cost of assisted living, home care or a nursing home for those who need it. However, if a beneficiary is beginning to suffer from Alzheimer’s or other dementia, it can be difficult to make sure premiums are being paid on time each month. Often, an adult child of the beneficiary pays the bills, or an automatic payment system is set up. Even then, problems can arise.

Recently, a Virginia man found that a long-term care policy for his parents had been cancelled without his knowledge. The man had set up automatic payments from his parents’ bank account. He made sure he was designated as a third party that the insurer would notify about any changes in the policy or lapses in coverage.

However, when his parents needed coverage, he found that the policy had lapsed eight months earlier. The man’s father, who had become confused and forgetful, went to his bank to cancel a different automatic bill payment, and ended up cancelling the long-term care premium payments. Letters from the insurer to the man’s parents went unopened, and the man said he was never notified as a designate third party.

Such third party notifications are generally sent by regular U.S. mail, so there is no proof that they were sent (as there would be with certified mail). Insurers say that the cost of sending and tracking certified mail for such notifications would result in higher premiums, and that when other types of bills go unpaid, certified letters are not sent. However, those with long-term care insurance are at greater risk for dementia because of the age of the beneficiaries.

Legislative efforts have been mounted to require long-term care insurers to send third party notifications by certified mail. In the meantime, families must be more vigilant about ensuring that premiums are paid and that any changes in policies are noted.

To learn more, visit http://www.elderlawnewyork.com/