How are premiums for an individual long-term care insurance policy typically priced?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Individual LTC policies are priced on an issue-age, level-premium basis: the premium is calculated using the insured's age at issue and stays level for the life of the policy, so the policyholder does not face automatic premium increases simply from growing older. Because the premium is locked in at issue, buying at a younger age produces a lower level premium — a key selling point. Premiums can still be increased later on a class-wide basis with state approval, but they do not automatically rise each year with attained age. Age at issue, health, benefit amount, elimination period, and riders determine the actual premium charged.
Why the other options are wrong
- B) Attained-age recalculation is not how individual LTC policies are priced; the level premium is set at issue and does not increase with age alone.
- C) Credit score is not a factor in LTC pricing; age, health, benefit design, and riders drive the premium.
- D) Premiums vary by age, health, benefits, and other factors; there is no uniform rate for all applicants, even of the same gender.
Memory hook
Lock the premium at issue age — the younger you buy, the cheaper the level premium for life.