Long-Term Care✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
Which factor is a component in the development of long-term care insurance premium rates?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
LTC premium rates are built from actuarial assumptions similar to other A&H products: morbidity and expected claim utilization, expenses, investment earnings, and lapse experience. Claim-cost assumptions dominate because LTC claims are long and costly. AH-IV.4 anchors the rate-component framework for accident and health pricing applied here to long-term care.
Why the other options are wrong
- B) Securities trading volume is irrelevant to insurance pricing assumptions.
- C) Home value is an applicant suitability consideration, not a pricing component.
- D) Sales-territory size affects distribution costs, not the actuarial rate basis.
Memory hook
LTC rates = morbidity claims plus expenses, interest, and lapses — not home prices or market volume.