Which of the Following Statements Regarding Long-Term-Care Insurance Is True

question 57

Multiple Choice

Which of the following statements regarding long-term-care insurance is true?

• A) Long-term-care policies do not reimburse the insured for the cost of services incurred on a day-to-day basis.
• B) The maximum duration of benefits is only 1 year.
• C) There is no waiting period to receive the benefits.
• D) Most long-term-care insurance policies are non-renewable in nature.
• E) Many policies offer inflation protection riders for an additional premium.

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Definitions:

Abandonment Option

A provision in a contract that allows a party to withdraw from the contract before the completion or maturity date.

Monte Carlo Simulation

A computational technique that uses random sampling and statistical modeling to estimate mathematical functions and mimic the operation of complex systems.

Probability Distributions

Probability distributions describe the likelihood of different outcomes in a stochastic process or experiment.

NPV

NPV, or Net Present Value, is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to gauge the profitability of an investment.