Certified Senior Advisor (CSA) Practice Test

Siegfried, being only 51 years old, is at a stage where he is planning for long-term care that may be needed many years down the line. Given the increasing costs associated with long-term care as well as the potential for inflation to erode the purchasing power of his coverage, the best choice for inflation protection in his case is a compound inflation rider.

A compound inflation rider ensures that the benefits from the policy increase each year based on a set percentage, typically ranging from 3% to 5%. This means that not only does the initial benefit amount increase annually, but the increases themselves also grow over time. This is especially important for a younger policyholder like Siegfried, who may face significantly higher costs for long-term care when he eventually needs services, possibly decades from now. The compounding nature of this rider ensures that his benefits will keep pace with or exceed the inflation rate, providing a vital safeguard against future cost increases.

In contrast, other options may not provide sufficient protection against long-term inflation. A simple inflation rider, for example, increases benefits by a fixed percentage but does not take into account the compounding effect. This could lead to inadequate coverage if healthcare costs rise sharply over the years. A guaranteed purchase option