State RegulationsNY specificDifficulty 2/5
A New York long-term care policy includes a 5% compounded inflation protection benefit. What does this benefit accomplish over the life of the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Reg 62 (11 NYCRR Part 52), inflation protection increases the policy's daily benefit amount and maximum benefit over time, at 5% compounded annually or tied to CPI-U, so the purchasing power of the benefit is not eroded as long-term care costs rise. The feature adjusts benefits, not premiums or refund rights.
Why the other options are wrong
- B) Inflation protection addresses the level of benefits, not premium guarantees.
- C) It creates no refund of costs or premiums when care turns out to be inexpensive.
- D) It increases the benefit over time; it does not convert the benefit into a premium-based lifetime maximum.
Memory hook
COLA grows the benefit, not promises about premiums.