New York Child Abuse Identification and Reporting Practice Exam

What is meant by the waiver of premium provision in a long term care contract?

1. The premium can be reduced after one year

2. Premiums are waived after the insured is confined for a set period

3. Premiums are refunded if the insured passes away

4. Premiums must be paid in advance

The correct answer is: Premiums are waived after the insured is confined for a set period

The waiver of premium provision in a long-term care contract refers to a situation where the insured individual is not required to pay premiums after they have been confined to a long-term care facility or similar setting for a specified duration. This provision is designed to alleviate financial burden during a time when the insured may be facing significant healthcare costs and may not have the means to manage their premium payments. For example, if a policy states that premiums are waived after the insured has been in a facility for 90 days, that means the insured does not have to continue making premium payments once that time frame is met. This feature provides important financial relief, as maintaining coverage is vital during long-term care, while simultaneously alleviating concerns over ongoing costs. The other options do not accurately represent the typical function of a waiver of premium provision in long-term care contracts. Reducing premiums after one year, refunding premiums upon death, or requiring advance payment do not align with the specific purpose of this provision, which is solely about suspending premium payments under defined conditions of care.