Little known secret about the Inflation Benefit in a long-term care policy

Depending upon your age, when buying your long-term care insurance policy, you may be better off buying a higher Daily Benefit with a 3% Compound Inflation Benefit rather than a lower Daily Benefit with a 5% Compound Inflation Benefit.

In some situations, it might be possible to purchase a $220 Daily Benefit with a 3% Compound Inflation Benefit for the same (or less) premium than a $150 Daily Benefit with a 5% Compound Inflation Benefit.

3%
Compound
5%
Compound
Starting Daily Benefit $220 $150
After 10 Years $296 $244
After 20 Years $397 $397
After 30 Years $534 $648

You can see from the chart that for the first 20 years or so, the strategy of choosing a higher Daily Benefit with a 3% Compound Inflation Benefit can be a better value than choosing a $150 Daily Benefit with a 5% Compound Inflation Benefit.

If your primary concern is protecting assets for your own (and your partner’s) financial independence, then you may be better off with the higher Daily Benefit amounts in the earlier years of the policy.

If it’s very important for you to protect assets for heirs or charity, then you should probably be more conservative and go with the 5% compound.

For more guidance on choosing the Inflation Benefit for your long-term care policy, click the following link:

https://ltcshop.wordpress.com/category/ltci-basics/inflation-benefit/

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About Scott A. Olson

Scott A. Olson, is the author of “The Guidebook for Making Long-Term Care Insurance Easier.” He is a licensed insurance agent and has specialized in long-term care insurance since 1995. He is licensed to sell long-term care insurance in over 40 states. Scott was born and raised in New Jersey and attended Rutgers University. Scott was a caregiver for a close relative for two years. That personal experience has made him acutely aware of how to help his clients design and choose a long-term care policy that will benefit them when they need it the most. Scott and his wife Carolyn live in Redlands, California. Scott and Carolyn have four sons.