Illinois Health Insurance Practice Exam

Which type of insurance aims to prevent significant asset depletion in the event of a long-term nursing home stay?

1. Disability Insurance

2. Life Insurance

3. Long-Term Care (LTC) Insurance

4. Medicare Supplement Insurance

The correct answer is: Long-Term Care (LTC) Insurance

Long-Term Care (LTC) Insurance is specifically designed to address the financial challenges associated with extended stays in nursing homes or receiving other forms of long-term care. This type of insurance provides coverage for services that help individuals with daily living activities, such as bathing, dressing, or eating, which are often needed due to chronic illnesses or disabilities. By having LTC insurance, individuals can protect their savings and other assets from being significantly depleted due to the high costs of long-term care, which can be quite burdensome without insurance support. Disability insurance primarily covers loss of income due to an inability to work following an injury or illness, rather than providing coverage for long-term care needs. Life insurance is meant to provide financial support to beneficiaries upon the policyholder's death, and does not focus on long-term care expenses. Medicare Supplement insurance assists with costs that Medicare does not cover but does not provide direct coverage for long-term custodial care needs that LTC insurance specifically targets. Therefore, LTC insurance is the most appropriate solution for preventing asset depletion due to prolonged nursing home care.