Long Term Care Certification Practice Test

What happens to a long-term care policy if the insured does not pay premiums after opting for a nonforfeiture option?

1. The policy is terminated immediately

2. The benefits will still be preserved

3. The insured can apply for a new policy

4. The premiums are automatically adjusted

The correct answer is: The benefits will still be preserved

When an individual selects a nonforfeiture option in a long-term care policy, it is designed to protect some benefits even if premiums are no longer being paid. Nonforfeiture options ensure that the policyholder does not lose all the benefits accrued over time due to nonpayment. Instead of the policy terminating immediately, the insured usually retains some form of value, such as a reduced paid-up policy or extended term benefits. This means that although the insured may stop paying premiums, the previous contributions still provide a safety net, which could consist of a portion of benefits that are preserved based on the value built up during the time of premium payments. Thus, even in cases where premium payment ceases, the policyholder will still have access to some level of benefits, making the preservation of benefits the correct interpretation of the scenario presented.