South Carolina Life and Health Practice Exam

Which of these factors is NOT taken into consideration when determining the cost of a long-term care policy?

1. Personal income

2. Age of the insured

3. Health history

4. Geographical location

The correct answer is: Personal income

When determining the cost of a long-term care policy, personal income is typically not a direct factor taken into consideration. Insurers generally focus more on objective risk factors that assess the likelihood and potential expenses related to long-term care needs, rather than subjective financial factors like income. The age of the insured is a significant factor, as older individuals are generally at higher risk of needing long-term care, which can lead to higher premiums. Similarly, health history is crucial in assessing the risk since individuals with previous health issues may require more extensive care, affecting the policy cost. Geographical location is also important, as the cost of care can vary widely based on local healthcare market conditions and living expenses, which influences how premiums are structured. In this context, personal income does not significantly influence the risk assessment or the cost structure of long-term care insurance, making it the factor that is typically not considered when determining the policy’s cost.