What is the purpose of suitability tests for long-term care insurance?

Suitability tests for long-term care insurance primarily focus on determining the financial appropriateness of applicants. These assessments aim to understand an individual's financial situation, including their income, savings, and overall ability to afford long-term care insurance premiums without compromising their financial stability. The purpose is to ensure that the coverage aligns with the individual's financial resources and long-term care needs, protecting consumers from taking on policies that may be unaffordable or unnecessary.

While assessing an applicant's overall health, evaluating existing policy benefits, and setting premium rates may also play significant roles in the overall process of obtaining long-term care insurance, these functions do not directly relate to the core purpose of suitability tests. Instead, suitability tests are specifically designed to evaluate whether a person is financially equipped to handle the costs associated with long-term care and the insurance premiums that accompany it. This priority helps safeguard consumers by aligning their financial readiness with the responsibilities that come with long-term care coverage.