long-term care (ltc) products

  • Like whole life and noncancelable or guaranteed renewable accident and health insurance products, LTC products have been designed with level premiums so as to accumulate amounts in the early policy years (when the cost of coverage is relatively low) to pay for benefits in the later policy years (when the cost of coverage is extremely high). The "excess" premiums in the early years are maintained in an "active lives reserve," which is held in addition to the unearned premiums reserve.

    Internal Revenue Service 1