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Future Purchased Option (FPO)

Quick Answer

A form of inflation protection in a Long-Term Care Insurance policy where the insured has the right to increase benefits periodically (e.g., every 3 years) to reflect increases in the cost of care. These increases can be elected without providing evidence of insurability as long as the insured is not receiving benefits at the time.

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Detailed Answer

A form of inflation protection in a Long-Term Care Insurance policy where the insured has the right to increase benefits periodically (e.g., every 3 years) to reflect increases in the cost of care. These increases can be elected without providing evidence of insurability as long as the insured is not receiving benefits at the time. In some policies, if the insured declines the number of successive offers of additional coverage, no further chances to increase are available. If additional coverage is purchased, the additional premium is based on attained age, i.e. the insureds then-current age. This is also known as the Guaranteed Purchase Option (GPO). At most ages, this type of inflation option would not be partnership qualified.

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