California Life and Health Insurance Practice Exam

Periodic increases in policy benefits are allowed in which long-term care policy provision?

1. Renewability

2. Inflation protection

3. Guaranteed issue

4. Comprehensive coverage

The correct answer is: Inflation protection

In long-term care insurance policies, the provision that allows for periodic increases in policy benefits is known as inflation protection. This feature is designed to help ensure that the benefits provided by the policy keep pace with the rising costs of care over time. With inflation protection, policyholders can receive increased coverage amounts at regular intervals, which helps maintain the purchasing power of their benefits and offers better financial security against the escalating expenses associated with long-term care. In contrast, the other provisions do not specifically pertain to adjusting benefits based on inflation. Renewability relates to the policyholder's right to renew the coverage without having to prove insurability again, guaranteed issue pertains to the assurance that individuals can get coverage without risk assessment, and comprehensive coverage refers to the breadth of services included in the policy, not to increases based on inflation. Thus, the inflation protection provision is essential for addressing the future financial needs of policyholders as care costs increase.