Disability & Long-Term CareQuestion 98 of 716
What inflation protection must a California LTC insurer offer to each applicant for a new individual long-term care policy?
a.10 percent simple annual increases for the first 5 years only, after which the benefit amount is frozen for life
b.5 percent compound or 5 percent simple annual increases, which the applicant must accept or reject in writing
c.2 percent compound annual increases, applied automatically with no written offer made to the applicant
d.1 percent simple annual increases, which the insurer may substitute for any other inflation offer
Explanation
California requires insurers to offer inflation protection on every new LTC policy, most commonly as 5 percent compound or 5 percent simple annual increases. The applicant must be given the opportunity to accept or reject the offer in writing; the offer itself cannot be skipped.
Law Reference: Cal. Ins. Code §10237.1This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)