How does long-term care affect a life insurance policy?

Long-term care can significantly impact a life insurance policy, particularly in situations where the policyholder opts to use the death benefit for long-term care expenses. If a policy allows for accelerated death benefits, the policyholder can access a portion of the death benefit while still alive to cover these care costs. Consequently, as funds are drawn from the death benefit for long-term care, the remaining amount available to beneficiaries upon the policyholder's death decreases. Thus, the remaining death benefit is reduced, which aligns with the accurate response in the context of the implications of long-term care on a life insurance policy.

In contrast, the other options may not accurately reflect the relationship between long-term care and life insurance policies. The death benefit does not typically increase due to long-term care needs, as it is more likely that expenses will detract from it, rather than enhance it. Additionally, saying that long-term care does not affect the policy overlooks the critical fact that accessing the benefits for care will diminish the death benefit. Lastly, long-term care costs would not inherently reduce cash value unless cash withdrawals are made for care, making that option less direct in describing the typical effect on the death benefit itself.