Long Term Care Certification Practice Test

A long-term care policy has been in force for over a year. Under what circumstances could the insurer rescind the policy?

1. The insured unintentionally omitted information

2. The insured intentionally gave information that had direct bearing on policy acceptance and benefit coverage

3. The insurer failed to process the claim correctly

4. The insured changed their address

The correct answer is: The insured intentionally gave information that had direct bearing on policy acceptance and benefit coverage

The correct answer is based on the principle of material misrepresentation in insurance contracts. If the insured intentionally provided false information that is directly related to the acceptance of the policy and the benefits it covers, the insurer has the right to rescind the policy. This intentional misrepresentation undermines the trust that is fundamental to the insurance contract, as the insurer relies on the accuracy of the information provided to assess risk and establish premium rates. In contrast, unintentional omissions may not result in rescission unless they are significant enough to change the insurer's risk assessment. The insurer's failure to correctly process a claim is a separate matter related to operational issues rather than the validity of the policy itself. Changing an address does not typically affect the validity of the policy unless it significantly alters coverage pertaining to specific geographical limits or risk.