State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
A client with a long-term care policy asks whether replacing it with a chronic illness accelerated death benefit rider on her life insurance policy is a fair trade. Under California law, the agent must explain that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California law (Sections 10295 et seq. and 10234.93) requires agents to disclose how accelerated death benefits, including chronic illness benefits, differ from long-term care insurance. An accelerated death benefit rider advances part of the life insurance death benefit when specified conditions are met, subject to policy limits, while an LTC policy is a separate coverage with its own triggers, benefit design, and consumer protections. The disclosure prevents unsuitable replacements.
Why the other options are wrong
- B) The products differ in coverage, triggering conditions, and protections; they are not equivalent.
- C) Replacing an LTC policy triggers disclosure obligations precisely to protect consumers from losing coverage.
- D) The relative amounts paid depend on the contracts; there is no rule that the rider pays more.
Memory hook
ADB = early slice of the death benefit. LTC = dedicated care coverage. Different tools demand a full disclosure.