CRPC Long-Term Care Planning 2 — Questions and Answers
Question 1: Which long-term care insurance policy type pays a fixed daily benefit regardless of actual care costs?
- Reimbursement policy
- Indemnity (per diem) policy (Correct answer)
- Partnership policy
- Hybrid policy
Correct answer: Indemnity (per diem) policy
An indemnity LTC policy pays the full daily benefit amount regardless of the actual care costs incurred.
Question 2: What is the primary benefit of a long-term care insurance partnership program?
- It allows insurers to share risk
- It protects assets equal to LTC benefits paid when applying for Medicaid (Correct answer)
- It provides Medicare supplement coverage
- It qualifies employers for a tax credit
Correct answer: It protects assets equal to LTC benefits paid when applying for Medicaid
Partnership programs allow policyholders to protect assets equal to the benefits paid by a qualified LTC policy when subsequently applying for Medicaid.
Question 3: Which inflation protection rider is most commonly recommended for LTC insurance buyers under age 60?
- 3% simple inflation
- 5% compound inflation (Correct answer)
- CPI-linked inflation
- No inflation rider needed
Correct answer: 5% compound inflation
A 5% compound inflation rider is typically recommended for younger buyers to keep benefits pace with rising care costs over a long time horizon.
Question 4: What benefit structure provides the greatest flexibility by allowing a total pool of dollars to be used across any covered care setting?
- Fixed daily benefit structure
- Pool of money (lifetime maximum benefit) structure (Correct answer)
- Weekly benefit structure
- Fixed indemnity structure
Correct answer: Pool of money (lifetime maximum benefit) structure
A pool of money structure provides a total dollar amount usable across different care settings rather than imposing a fixed daily limit.
Question 5: What is a hybrid long-term care product?
- A policy covering both home and nursing home care
- A combination of life insurance or annuity with LTC benefits (Correct answer)
- A policy combining Medicare and Medicaid benefits
- A group and individual LTC policy combination
Correct answer: A combination of life insurance or annuity with LTC benefits
Hybrid products combine life insurance or annuities with LTC riders so that unused LTC benefits remain as a death benefit.
Question 6: After what age do long-term care insurance premiums and health underwriting typically make new coverage impractical for most consumers?
- After age 55
- After age 60
- After age 70 (Correct answer)
- After age 80
Correct answer: After age 70
Premiums increase sharply after age 70 and many applicants face health underwriting declines, making purchase after 70 often impractical.
CRPC Long-Term Care Planning 2
Which long-term care insurance policy type pays a fixed daily benefit regardless of actual care costs?