Long Term Care Certification Practice Test

What do long-term care policies offer to policyholders to account for inflation?

1. The option of purchasing coverage that raises benefit levels accordingly

2. Guaranteed level premiums throughout the policy

3. Automatic renewals without health assessments

4. Coverage for all types of custodial care

The correct answer is: The option of purchasing coverage that raises benefit levels accordingly

Long-term care policies often include provisions to enhance benefit levels in response to inflation, allowing policyholders to maintain the purchasing power of their benefits over time. This inflation protection may manifest as an option to purchase coverage that automatically increases benefit amounts based on an inflation index or predetermined schedule. Such an option is crucial since the costs associated with long-term care services can rise significantly over the years due to inflation, which can diminish the effectiveness of a fixed benefit amount at the time the policy was purchased. While guaranteed level premiums, automatic renewals, and coverage for all custodial care are important features of some long-term care policies, they do not specifically address the critical need for benefits to keep pace with rising costs due to inflation. Thus, the correct answer underscores the importance of inflation protection in these policies, ensuring that policyholders are adequately protected when they need care in the future.