State RegulationsNY specificDifficulty 3/5
An insured bought a New York long-term care policy with a nonforfeiture benefit and later stops paying premiums after several years of payments. What is the effect of the nonforfeiture benefit?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Reg 62 (11 NYCRR Part 52), a nonforfeiture benefit ensures that an insured who stops paying premiums after a specified number of years retains some benefit from the policy, typically through reduced paid-up coverage or a shortened benefit period. The lapsed policy is not reduced to a total loss of everything the insured paid in.
Why the other options are wrong
- A) The benefit preserves coverage; it is not a mechanism for refunding premiums in cash.
- B) Leaving the insured with nothing is exactly what the nonforfeiture requirement guards against.
- C) Coverage continues only in reduced form; full lifetime benefits do not survive the stoppage of premiums.
Memory hook
Lapse late, keep something: nonforfeiture saves a slice.