What is the “Inflation Benefit” in a long-term care insurance policy?

Inflation Benefit = how a long-term care insurance policy’s benefits grow in order to try to keep pace with the increasing costs of care.

Source: National Association of Insurance Commissioners
A Shopper’s Guide to Long-Term Care Insurance 2009

The Inflation Benefit is sometimes called “Inflation Protection” or “Benefit Increases” or “Benefit Increase Option”.

Your Starting Daily Benefit will grow according to whichever Inflation Benefit you choose for your long-term care policy.

Your Policy Limit will also grow according to whichever Inflation Benefit you choose for your long-term care policy.

A well-designed policy, with an appropriate Inflation Benefit, becomes more valuable over your lifetime.  A poorly-designed policy, with little or no Inflation Benefit, may not be worth much 10 or 20 years from now, so choose your Inflation Benefit wisely.

There are 2 main types of Inflation Benefit:

Type 1: As the benefits increase, your premium also increases.

Type 2: The increases in the benefits each year do not make the premium go up each year.

Be very careful when comparing policies.

One of the most common mistakes made when shopping for long-term care insurance is comparing a “Type 1″ Inflation Benefit from one long-term care policy with a “Type 2″ Inflation Benefit from another long-term care policy.  That’s comparing “apples to oranges”.


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.