Key Takeaways
- California requires a 10-day free look period for disability insurance policies
- Individual disability policies must include a 30-day notice before cancellation for nonpayment
- California Long-Term Care Partnership Program provides Medicaid asset protection
- LTC policies must offer inflation protection options and nonforfeiture benefits
- California State Disability Insurance (SDI) is mandatory for most employees
California Disability and Long-Term Care Insurance
California has specific regulations for disability income insurance and long-term care insurance that protect consumers and ensure adequate coverage.
Disability Income Insurance
Free Look Period
California requires a 10-day free look period for individual disability insurance:
- Policyholder can return for full premium refund
- Begins when policy is delivered
- Applies to individual policies
Required Policy Provisions
California disability policies must include:
| Provision | Requirement |
|---|---|
| Grace Period | Minimum 31 days for annual premium |
| Reinstatement | Must allow reinstatement within 3 years |
| Notice of Claim | 20 days after loss begins |
| Time to Pay Claims | 30 days after proof of loss |
| Legal Actions | No earlier than 60 days after proof of loss |
Cancellation Requirements
For guaranteed renewable policies:
- 30-day written notice before cancellation for nonpayment
- Cannot cancel for health reasons
- Can only cancel for nonpayment or fraud
California State Disability Insurance (SDI)
California has a mandatory state disability program:
Coverage
| Feature | Detail |
|---|---|
| Who's Covered | Most California employees |
| Funding | Employee payroll deductions |
| Benefit Amount | 60-70% of wages (up to max) |
| Duration | Up to 52 weeks |
| Waiting Period | 7 days (illness) or day of injury |
Related Programs
- Paid Family Leave (PFL) - Up to 8 weeks for family care
- Elective Coverage - Self-employed can opt in
- Voluntary Plans - Employers can substitute approved private plans
Long-Term Care Insurance
California has comprehensive LTC insurance regulations:
Free Look Period
- 30-day free look for LTC policies
- Applies to all individual LTC policies
- Policyholder can return for full refund
Required Provisions
| Provision | Requirement |
|---|---|
| Renewability | Must be guaranteed renewable |
| Pre-existing Conditions | Max 6-month look-back |
| Elimination Period | Must disclose clearly |
| Inflation Protection | Must offer option |
| Nonforfeiture | Must offer option |
Inflation Protection Options
Insurers must offer at least one inflation protection option:
- Compound inflation (3% or 5%)
- Simple inflation
- Consumer Price Index adjustment
- Benefit increase option
California Partnership Program
California participates in the Long-Term Care Partnership Program:
How It Works
- Purchase a Partnership-qualified LTC policy
- Use benefits for care
- If benefits exhaust, apply for Medi-Cal
- Asset protection - Keep assets equal to benefits received
Example
| Without Partnership | With Partnership |
|---|---|
| Spend down to $2,000 | Protect assets up to benefits paid |
| Lose home equity | May keep home and assets |
| Standard Medi-Cal rules | Enhanced asset protection |
Producer Requirements
To sell LTC insurance in California:
- Complete 8 hours of LTC-specific training
- Complete training before selling
- Ongoing CE requirements
- Must complete before each license renewal
How long is the free look period for long-term care insurance in California?
What is the primary benefit of purchasing a California Partnership-qualified long-term care policy?
What is the maximum duration of California State Disability Insurance (SDI) benefits?