A policyholder in Akron designates her daughter to receive notice before her long-term care policy lapses for nonpayment, then misses a premium. Under OAC 3901-4-01, which sequence must the insurer follow before the lapse becomes effective?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
OAC 3901-4-01(G) requires the application to include a written designation of at least one third party to receive lapse or termination notice, or a signed waiver. Before a long-term care policy may lapse for nonpayment, the insurer must give notice to the insured and the designated person at least 30 days before the effective lapse, and that notice may not be sent until 30 days after the premium is due and unpaid; mailed notice is deemed given 5 days after mailing. Reinstatement must also be offered if the insured shows cognitive impairment or loss of functional capacity before the grace period expired and requests it within 5 months after termination.
Why the other options are wrong
- A) Immediate notice and next-day lapse defeat both the 30-day unpaid period and the 30-day advance notice requirement.
- C) The entire point of the third-party designation is that the named person gets the same advance notice as the insured.
- D) A lapse is not effective immediately upon nonpayment; the insurer must run the notice sequence first, and the 5-month reinstatement right applies only in cognitive-impairment situations.
Memory hook
LTC lapse: 30 days unpaid, then 30 days notice to insured and designee.