Long Term Care Certification Practice Test

To obtain the lowest premium for long-term care insurance, which combination should a policyowner select?

1. Short elimination period and long benefit period

2. Long elimination period and short benefit period

3. Short elimination period and short benefit period

4. Long elimination period and long benefit period

The correct answer is: Long elimination period and short benefit period

Selecting a long elimination period along with a short benefit period is often the most effective strategy to secure the lowest premium for long-term care insurance. A long elimination period means that the policyholder must wait a longer time before the insurance benefits kick in after the need for care arises. This typically lowers the insurance risk for the provider, allowing them to offer a reduced premium. When policyholders can manage to cover their costs during the waiting period, they effectively decrease the insurance company's immediate financial liability, resulting in reduced premiums. On the other hand, a short benefit period refers to the time the policy will provide benefits after the elimination period is over. While a shorter benefit period means less coverage and potentially higher costs if the insured requires long-term care for an extended period, it also contributes to a lower premium because the insurer's overall exposure is diminished. Therefore, by combining a long elimination period with a short benefit period, the policyholder strategically minimizes both their premium costs and the insurer's exposure, providing a financially practical option in the marketplace for long-term care insurance.