Long Term Care Certification Practice Test

An applicant has a strong desire to obtain a long-term care policy but feels the premium is more than his budget will allow. The agent may recommend all of the following to reduce the premium EXCEPT:

1. Increase the daily benefit

2. Extend the elimination period

3. Decrease the maximum benefit amount

4. Reduce optional features

The correct answer is: Increase the daily benefit

Increasing the daily benefit would actually lead to a higher premium, not a reduction. The daily benefit refers to the amount paid by the policy per day for services received, such as assistance with activities of daily living. If the daily benefit amount is raised, it means that the insurance company would be potentially paying more for each day of care, which directly results in higher premiums for the policyholder. In contrast, extending the elimination period, decreasing the maximum benefit amount, and reducing optional features all serve to lower the premium costs. The elimination period is the waiting time before benefits kick in, so increasing it minimizes the risk for the insurer and thus reduces premiums. Similarly, lowering the maximum benefit reduces the total payout exposure for the insurer, and removing optional features leads to fewer services covered under the policy, directly translating to lower costs. Understanding the mechanics of how benefits and coverage levels affect premiums is crucial for applicants looking to tailor their long-term care plans to their financial circumstances.