Long-Term Care✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
With a long-term care rider on a life insurance policy, how do the LTC benefits paid typically affect the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A long-term care rider on a life policy generally accelerates the death benefit: benefits paid for covered long-term care reduce, dollar for dollar or on a schedule, the amount later paid to beneficiaries. This is why the rider's benefit pool is tied to the policy's face amount rather than being an unlimited separate benefit. LIFE-III.1g tests this LTC rider mechanics point.
Why the other options are wrong
- A) Benefits are not layered on top of the death benefit; they consume it in advance.
- C) The rider does not create a separate cash account; it draws on the death benefit.
- D) Qualified LTC benefits may be received tax-free under IRC Section 7702B, not taxable under all circumstances.
Memory hook
LTC rider = spend the death benefit early on care; beneficiaries inherit what is left.