Guaranteed Renewability

The insurer cannot cancel the policy, but may increase premiums only on a class-wide basis with regulatory approval — LTC policies are guaranteed renewable: the insurer may not cancel or refuse to renew coverage because of the insured's age or deteriorating health, as long as premiums are paid. Premiums, however, are not guaranteed to stay level; insurers may raise rates, typically on a class-wide basis subject to state insurance department approval. The guaranteed renewability feature protects the insured against individual cancellation while allowing the insurer to adjust rates for an entire block of similar policies, so the individual cannot be singled out but the block can be repriced when claims experience requires it.

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The insurer cannot cancel the policy for health reasons, but may increase premiums for an entire class of policyholders — Guaranteed renewability means the insurer must renew the policy as long as premiums are paid — it cannot terminate coverage because the insured's health deteriorates or because claims have been paid. However, guaranteed renewability does not freeze premiums: the insurer may increase premiums if the increase applies to an entire class of policyholders, subject to state rate approval, and cannot single out an individual. This guarantee is a cornerstone of LTC insurance, because the coverage is needed most at exactly the time the insured becomes uninsurable. California regulates LTC premium increases, and rate-stability disclosures are part of the suitability process.

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