A life insurance policy includes an LTC acceleration rider that qualifies under IRC §7702B as a 'qualified long-term care insurance contract.' For benefits to be excludable from gross income under IRC §7702B(a), the insured must be certified by a licensed health-care practitioner as 'chronically ill.' Which standard does §7702B(c)(2) impose for that certification?

Why this is the answer

IRC §7702B governs qualified long-term care insurance contracts, including LTC acceleration riders attached to life policies. Benefits are excludable from gross income only if the insured is certified as 'chronically ill.' Section 7702B(c)(2) defines that term with a two-pronged test: (1) the insured is unable to perform without substantial assistance from another person at least 2 of 6 activities of daily living (bathing, continence, dressing, eating, toileting, transferring) for a period expected to last at least 90 days; OR (2) the insured requires substantial supervision to protect from threats to health and safety due to severe cognitive impairment such as Alzheimer's disease.