Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
A client is looking for a long-term care insurance policy that will adjust their daily benefit amount annually to account for inflation. Which rider would be most appropriate for this client?
- AWaiver of Premium rider
- BNonforfeiture rider
- CInflation Protection rider
- DGuaranteed Insurability rider
Show answer & explanationAnswer & explanation
Correct answer: C. Inflation Protection rider
The Inflation Protection rider increases the daily benefit amount over time, usually annually by a fixed percentage (e.g., 3% or 5% compound), to help the policy's benefits keep pace with the rising costs of long-term care.
Why the other options are wrong
- A. A Waiver of Premium rider waives premiums if the insured is receiving benefits, not increasing benefits.
- B. A Nonforfeiture rider provides options for benefits if the policy lapses due to non-payment of premiums.
- D. A Guaranteed Insurability rider allows the insured to purchase additional coverage at later dates without proof of insurability.
Inflation Protection Rider (LTC)
An optional rider in a Long-Term Care (LTC) insurance policy that automatically increases the daily benefit amount over time to help offset the rising cost of long-term care services due to inflation.
- Increases benefits annually by a set percentage (e.g., 3% or 5%).
- Can be simple or compound interest rate increases.
- Crucial for maintaining purchasing power of benefits over decades.
- Adds to the policy premium.
Memory trick: LTC riders add special powers to your long-term care shield.