Long Term Care Insurance Keeps Up With Inflation
Long Term Care Insurance Keeps Up With Inflation
Just like any goods and services, the price of long term care also increases due to inflation. And when this happens, the burden is saddled by many American adults who desperately need long term care.
We all know that long term care insurance is expensive, and the rates could soar in a year or two. Buying a long term care insurance inflation protection as addition to your policy can help you save from future rates. And since many policyholders do not consume the benefits in many years, having inflation protection secures your policy against the rising cost of care.
In its simplest explanation, the inflation protection increases your daily or monthly benefit amount (depending on your chosen percentage) that will compensate for the increased costs of care. Your benefits are increasing every year, but the premiums are guaranteed fixed. You could choose from the following:
5% Compound Inflation Protection
5% Simple or Equal Inflation Protection
Future Purchase Option
Consumer Price Index (CPI)
3% Compound
4% Compound
Simple Inflation Protection
The benefit increases by the same dollar amount every year. For example, a$100 daily benefit with 5% inflation will increase by $5 per day and become $200 daily benefit in 20 years.
5% Compound Inflation Protection
The compound inflation protection is much better than the simple inflation that will benefit individuals below 65. For instance, a daily benefit of $100 will amount to $265 in 20 years. Thus, this type of inflation is recommended to people with high life expectancy, while those with low life expectancy should consider simple inflation.
Take note that both simple and 5 percent compound inflation protection automatically increase the benefits but keep the premiums the same.
Future Purchase Option
Unlike the simple and compound inflation that automatically increase the benefits, insurance companies also offer future purchase option (FPO) that is offered every year or two. This option is offered by the insurance company every three years. However, if you refuse the offer, you won't be offered with another option again. But, if you accept the offer, the amount of coverage will depend on your current age.
3% and 4% Compound Inflation Protection
Few companies offer 3 percent and 4 percent of inflation protection. Think about getting these lower rates compared to standard rates; however, these rates can go far in 25 years or more. These rates are recommended to those who purchased LTCi policy in their late 60s.
Consumer Price Index (CPI)
This is offered by few insurance companies. How this works? It increases your long term care insurance benefits at the actual CPI Index as computed by the U.S. government. The threat of this is that medical costs soar faster than inflation rate.
Now, knowing that the costs of long term care will increase in 10 to 20 years, a policy with inflation protection prevents unlikely increments in the future. This allows you to use your money responsibly with other important things rather than spend them solely on long term care. Without inflation protection, you are risking your money for nothing Choosing Long Term Care Insurance Policy and Company Long Term Care Insurance: What To Know The Underwriting Process in Long Term Care Insurance The thread separating life and death is very thin! Mortgage Life Insurance or Life Insurance, What Is best? I Live Alone Do I Need Life Insurance? How To Take Care Of All Your Final Expenses With Burial Insurance For Seniors Life Insurance For Police Officers And Other Law Enforcement Individuals The Many Options Of No Medical Exam Life Insurance. What Is Best? Life Insurance You Can Borrow From What are the risks covered by a life insurance? Silk Scarves - Diverse Opinions In Both Trend And Everyday Life Viewpoints A Guide To Life Insurance By Age