Long Term Care Certification Practice Test

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Prepare for your Long Term Care Certification Test. Study with flashcards and multiple choice questions, complete with hints and explanations for every question. Get ready to excel in your exam!

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Due to chronic illness, a person must activate the long-term care rider attached to his annuity. How will his annuity be affected?

The value of the annuity will be decreased by the amount of long-term care benefits paid
The annuity will be converted to a term policy
The benefits will not be deducted from the annuity value
The annuity will increase in value

The correct answer is: The value of the annuity will be decreased by the amount of long-term care benefits paid

When a long-term care rider attached to an annuity is activated due to a chronic illness, the amount of long-term care benefits paid typically reduces the value of the annuity. This is because the benefits disbursed for long-term care are drawn from the overall value of the annuity. Essentially, the rider allows the annuity owner to access a portion of their benefits to cover long-term care expenses, which means that the remaining balance in the annuity will be decreased accordingly by the amount of funds allocated for those care benefits. This reflects a fundamental concept within insurance and financial products: when benefits are paid out, they usually diminish the total value remaining in the account or policy. In this instance, it is a necessary adjustment in preserving the finances meant for long-term care needs while ensuring the annuity remains a viable source of income or support for the individual in the future.