Final answer:
The correct answer is option D) Daily Benefit Amount.
Step-by-step explanation:
When determining the type of costs associated with individual long-term care insurance, it's important to understand terms like premium, deductible, copayment, and daily benefit amount. In the context of insurance that pays a daily maximum of $120 for being confined to a nursing home, we're referring to the daily benefit amount. This is the fixed sum that the insurance company will pay per day for the services provided to the insured individual in a nursing home setting.
The premium is the amount you pay periodically for the insurance coverage itself. The deductible is the amount you must pay out-of-pocket before the insurance starts to cover its portion of your bills. A copayment is a predetermined fee you pay for a specific service or prescription. Unlike these, the daily benefit amount is not an out-of-pocket cost, but rather the amount the insurer provides to cover the cost of daily care up to a certain limit.