How does your choice of Inflation Benefit impact the Daily Benefit over the life of your long-term care policy?

How does the Inflation Benefit impact the Daily Benefit of your long-term care insurance policy?

I noted in a previous post that the Daily Benefit is the single most important part of your long-term care policy.  The Daily Benefit, however, is linked to the Inflation Benefit.  How much your long-term care policy will pay for each day you need care depends upon not only the Daily Benefit, but also the Inflation Benefit.

The following chart illustrates how your choice of Inflation Benefit impacts the growth of the Daily Benefit over a 10, 20, and 30-year period.  This chart assumes a Starting Daily Benefit of $150:

3%
Compound
5%
Simple
5%
Compound
Starting Daily Benefit $150 $150 $150
After 10 Years $202 $225 $244
After 20 Years $271 $300 $397
After 30 Years $364 $375 $648

Surprisingly, over a 30-year period, 5% Simple grows the Daily Benefit slightly faster than 3% Compound.

5% Compound grows the Daily Benefit much faster than either the 3% Compound or the 5% Simple.

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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.