Long Term Care Certification Practice Test

What is the key distinction between a Guaranteed Purchase option and an Inflation Protection Option in long-term care insurance?

1. Guaranteed Purchase affects benefits annually

2. Inflation Protection increases premiums annually

3. Guaranteed Purchase is associated with obtaining benefits

4. Inflation Protection is only available to seniors

The correct answer is: Inflation Protection increases premiums annually

The correct answer highlights that the Inflation Protection Option is designed to address the rising cost of care by adjusting the benefits to help maintain their value over time. This adjustment typically occurs on a predetermined schedule or in response to the Consumer Price Index, effectively increasing the benefit amount as well as the premiums associated with the policy. This is crucial for ensuring that policyholders do not find their coverage insufficient as healthcare expenses rise over the years. The key distinction lies in the purpose of the two options. The Guaranteed Purchase option allows policyholders to increase their coverage amount at certain times without proving medical insurability, but it does not inherently adjust for inflation like the Inflation Protection Option does. The other options inaccurately characterize the functions and limitations associated with these terms, as inflation protection is not solely about when premiums are increased, whereas guaranteed purchase generally enhances coverage possibilities rather than focusing on benefits' inflation adjustments.