State RegulationsNY specificDifficulty 2/5
Soon after a New York long-term care insured enters a nursing home, the insurer tries to cancel her policy in the middle of the policy period because of the claims she is filing. Under Reg 62, the insurer:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Reg 62 (11 NYCRR Part 52), New York long-term care policies are guaranteed renewable, which protects the insured during the policy period as well as at renewal: the insurer cannot cancel coverage because the insured's health has deteriorated or because claims are being paid. A policyholder entering a nursing home is using the coverage exactly as intended. If claims costs genuinely pressure the insurer, its remedy is a class-wide rate adjustment - never cancellation of the individual who got sick.
Why the other options are wrong
- A) Nursing-home confinement is the insured event the coverage exists to pay for; it is not a material-change ground for cancelling the policy.
- B) Claims exceeding premiums is the insurer's pricing problem, not a cancellation right the guaranteed renewable standard grants.
- D) Notice and a premium refund cannot convert a prohibited health-based cancellation into a lawful one.
Memory hook
Mid-term or at renewal, sick insureds stay covered.