State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An agent in California is selling a life policy with an accelerated death benefit for chronic illness. Under Section 10295 et seq., the agent must disclose to the client that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California requires disclosure of the differences between accelerated death benefits for chronic illness and long-term care insurance. The ADB pays a benefit — a lump sum under Section 10295.1 or periodic payments — but it is not an LTC policy, does not coordinate with LTC services, and reduces the eventual death benefit. Misrepresenting an ADB as LTC coverage is a prohibited practice under the accelerated death benefit rules.
Why the other options are wrong
- B) An accelerated death benefit does not replace long-term care insurance; the two serve different purposes and the ADB does not fund ongoing care services.
- C) ADB payments are not guaranteed to cover all long-term care costs; the benefit is limited to a portion of the death benefit.
- D) The accelerated death benefit reduces the death benefit by the amount accelerated, so it does affect the proceeds payable.
Memory hook
Chronic-illness ADB is not LTC insurance. Disclose the difference; the benefit shrinks the death benefit.