Final answer:
To reduce her long-term care insurance premium, Bian can either extend her elimination period or shorten her benefit period. Increasing coverage or adding a rider would increase her premium. It's also important to consider adverse selection when premiums increase.
Step-by-step explanation:
When Bian is worried about affording her long-term care insurance premium, she can consider a few options to reduce it. One effective way to lower the premium is by extending her elimination period, which is the amount of time that must pass before the insurance company starts paying benefits. By choosing a longer elimination period, Bian would agree to cover her own expenses for a longer time before the insurance kicks in, thus reducing the risk for the insurance company and consequently lowering her premiums.
Another option she might consider is shortening her benefit period, which is the duration the insurance company would pay out benefits. A shorter benefit period means less potential cost to the insurer, which can also reduce Bian's premiums. However, increasing her coverage or adding a rider would actually increase her premium rather than decrease it.
Lastly, it's important to note the adverse selection which can occur if insurance companies raise premiums too high; higher premiums can lead to lower-risk individuals opting out of insurance, leaving a riskier pool of insured individuals, and potentially resulting in further financial loss for the insurance company.
Answer: c. extending her elimination period