Under CIC Section 10234.85, when is a long-term care insurance replacement presumed to be unnecessary?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 10234.85 prohibits causing a policyholder to replace an LTC policy unnecessarily and establishes a presumption that any third or greater policy sold to a policyholder within any 12-month period is unnecessary. The presumption does not apply when a policy is replaced solely to consolidate policies with a single insurer. The statute also states that nothing permits a replacement that results in both a decrease in benefits and an increase in premium. These rules curb churning — agents generating commissions by repeatedly selling new LTC policies without genuine benefit to the consumer.
Why the other options are wrong
- B) The identity of the insurer is not the test; the presumption is based on the number of policies sold within a 12-month window, not on which company sells them.
- C) Consolidation with a single insurer is the statutory exception, so that replacement is not presumed unnecessary.
- D) The presumption applies regardless of the policyholder's age; age is not part of the third-policy-within-12-months test.
Memory hook
Third LTC policy in 12 months = presumed churn. One-insurer consolidation is the safe harbor.