Life & Health Insurance Practice Exam

The primary purpose of inflation protection in long-term care insurance is to ensure that the benefits provided by the policy keep pace with rising costs. As the cost of care increases over time due to inflation, having inflation protection ensures that the amount available for long-term care services does not diminish in value years after the policy is purchased. This feature is particularly important since health care costs have historically risen at a rate that outpaces general inflation.

By incorporating inflation protection, policyholders safeguard themselves against the risk of inadequately funded care when they need it most, allowing them to access the benefits necessary for quality care, which might include home health care, nursing home services, or assisted living facilities as prices rise. Thus, the focus is on maintaining the purchasing power of the benefits over the duration of the policyholder’s life.