A life insurance policy with an accelerated death benefit for chronic illness must disclose that:

Why A is correct

California law requires clear disclosure when a life insurance policy's accelerated death benefit for chronic illness is not a long-term care insurance policy, and an explanation of the differences between the two products. An accelerated death benefit pays a portion of the life insurance death benefit early, while the insured is living with a qualifying chronic illness. Long-term care insurance is a separate product that pays for custodial or personal care services. Marketing or describing the two as identical is a prohibited practice that misleads consumers about the nature of the coverage. The disclosure requirement ensures that consumers understand what the accelerated death benefit actually provides and how it differs from a long-term care policy.

Why the other options are wrong

• B) The two products differ fundamentally in purpose and payment, and treating them as identical is exactly the misleading practice the disclosure requirement prevents. The accelerated death benefit is a life insurance feature, while long-term care insurance is a separate care-benefit product.
• C) An accelerated death benefit is governed by the life policy's terms and is not an unlimited nursing home or custodial care benefit. The benefit amount is defined by the policy and reflects a portion of the death benefit, not open-ended care coverage.
• D) An accelerated death benefit is a feature of the life insurance policy, not a Medicare supplement. Medicare supplements are a distinct health product category, and describing the life benefit as one would mischaracterize the coverage.

Memory hook

The accelerated benefit is not long-term care; disclose the difference.