Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
A client has a long-term care insurance policy that offers a 'daily benefit' of $150 and an 'elimination period' of 90 days. If the client requires covered long-term care for 120 days, how much will the policy pay?
- A$4,500
- B$22,500
- C$13,500
- D$18,000
Show answer & explanationAnswer & explanation
Correct answer: A. $4,500
The elimination period is a waiting period before benefits begin. For a 120-day care period with a 90-day elimination period, benefits will be paid for 30 days (120 - 90 = 30). The total payout is then 30 days * $150/day = $4,500.
Why the other options are wrong
- B. This calculation likely uses an incorrect number of payable days or a misapplied daily benefit.
- C. This calculation incorrectly subtracts the elimination period from the daily benefit or miscalculates the number of payable days.
- D. This calculation incorrectly pays for the entire 120 days without applying the elimination period.
Long-Term Care Elimination Period
A waiting period in a long-term care insurance policy, starting from the day care is first received, during which the policy will not pay benefits. It's similar to a deductible.
- Must be satisfied before benefits begin.
- Common periods are 30, 60, 90, or 180 days.
- Insured is responsible for care costs during this period.
- Longer periods result in lower premiums.
Memory trick: Eliminate the wait, then multiply by the daily benefit.