Inflation Protection (LTC)
Riders adjusting LTC daily benefits upward (simple or compound) to preserve purchasing power, required to be offered with tax-qualified plans.
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Practice This Concept
A common inflation protection option on long-term care policies increases the daily benefit by which amount?
3% to 5% compounded annually — Industry-standard inflation protection increases the LTC daily benefit by roughly 3% to 5% compounded annually so the benefit keeps pace with the rising cost of care over a long claim period. Without it, a benefit fixed at today's prices loses substantial purchasing power over ten or twenty years. This figure is cross-checked against the PassSprint fact table (3%-5% compound is the standard industry option).
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What is an outline of coverage in long-term care insurance?
A plain-language summary of a policy's benefits, limitations, and exclusions that is given to the applicant — An outline of coverage is a standardized, plain-language summary of the policy's principal benefits, significant limitations, and exclusions. It is designed to give applicants a clear, comparable overview before they buy, supplementing the policy itself. In California, LTC insurers must provide an outline of coverage, and CIC Section 10234.93(a)(5) requires the notice-to-buyer warning to be displayed prominently on page one of the policy or certificate and the outline of coverage. Because LTC policies vary widely in daily benefits, elimination periods, inflation protection, and benefit triggers, the outline of coverage helps consumers compare products and understand exactly what is covered and what is not.
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