California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client has a long-term care insurance policy that offers a 'Guaranteed Purchase Option' (GPO) rider. What does this rider allow the policyholder to do?
- AReceive a refund of premiums if they never use their long-term care benefits.
- BPurchase a new long-term care policy from the same insurer if their current policy lapses.
- CPurchase additional long-term care coverage at a future date without evidence of insurability.
- DConvert their long-term care policy into a life insurance policy at a specified age.
Show answer & explanationAnswer & explanation
Correct answer: C. Purchase additional long-term care coverage at a future date without evidence of insurability.
The Guaranteed Purchase Option (GPO) rider allows the policyholder to increase their long-term care benefits at specified future dates or events (e.g., age milestones) without having to prove their health or insurability, protecting against inflation and future care cost increases.
Why the other options are wrong
- A. This describes a 'Return of Premium' rider, which is a different type of rider.
- B. The GPO allows for increasing existing coverage, not purchasing a new policy after a lapse.
- D. This describes a conversion option, typically found in term life insurance, not directly related to LTC GPO.
Guaranteed Purchase Option (LTC)
A rider in long-term care insurance that allows the policyholder to buy additional coverage amounts at predetermined intervals or specific ages without undergoing further medical underwriting.
- Protects against inflation and rising care costs.
- No evidence of insurability required for increases.
- Increases typically offered every 2-3 years or at specific ages.
Memory trick: LTC riders secure future care, ensuring your purchase is always there.