An LTC applicant does not meet the insurer's financial suitability standards. Under CIC Section 10234.95(h), what may the insurer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 10234.95(h) provides that if the issuer determines the applicant does not meet its financial suitability standards — or if the applicant declines to provide the information — the issuer may reject the application. Alternatively, it must send the applicant a letter similar to the NAIC's Long-Term Care Insurance Suitability Letter, which informs the applicant that the coverage may not be appropriate given their financial situation. If the applicant declined to provide financial information, the issuer may use another method to verify the applicant's intent. The returned letter or verification record becomes part of the applicant's file, ensuring unsuitable LTC coverage is not simply issued.
Why the other options are wrong
- B) Issuing at a lower premium without suitability compliance does not follow the statute; the issuer must reject the application or send the suitability letter.
- C) Issuing a smaller policy without disclosure is not authorized; the statute requires rejection or the suitability-letter process.
- D) The statute does not direct applicants to other insurers; it governs how the original issuer handles the unsuitable applicant.
Memory hook
Not suitable? Reject it, or send the Suitability Letter — never quietly sell the wrong policy.