What is the “Inflation Benefit” in a Long-Term Care Insurance Policy?

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What is the “Inflation Benefit” in a Long-Term Care Insurance Policy?

January 9, 2012
LTCFacts
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2 comments

Inflation Benefit =

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

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”.

2 Comments

  1. Welcome to LTCFacts! | LTCFacts.org January 9, 2012at 10:12 am Reply

    [...] care policy gives you many choices for your benefits.  You choose your:  Daily Benefit, Inflation Benefit, Policy Limit, and Elimination Period.  The richer the benefits you choose, the higher your [...]

  2. How Much Does Long-Term Care Insurance Cost? | Samuel Lee January 9, 2012at 10:12 am Reply

    [...] care policy gives you many choices for your benefits.  You choose your:  Daily Benefit, Inflation Benefit, Policy Limit, and Elimination Period.  The richer the benefits you choose, the higher your [...]

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