Long Term Care Insurance Inflation Protection

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The Perks of Long Term Care Insurance Inflation
Protection
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Do you need long term care insurance inflation
protection? According to Gensworth 2013 Cost of
Care Survey, the average cost for you to stay in
a private nursing home is 220 per day. If you
will be staying for three years in this type of
LTC facility, you will need to have 250,000 in
your savings account to cover for long term care
expenses.
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Why You Need Long Term Care Insurance Inflation
Protection?
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Although, LTC insurance can help cover long term
care costs, the problem is that health care and
medical expenses are increasing every year.
Statistics show that long term care costs have
increased an average of 5 on an annual basis.
Long term care insurance inflation protection or
a benefit increase rider, can help secure your
future because it increases your benefits each
year. Furthermore, an inflation protection can
help ensure that your coverage and benefits keep
up with the rising health care costs. You are
guaranteed that your daily benefit and maximum
lifetime benefits increases by a specific
percentage every year. Even though, it is
expensive to add long term care insurance
inflation protection to your LTC policy, it can
protect you from being underinsured.
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Risks of Being Underinsured
Risks of Being Underinsured
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So what will happen if you are underinsured? For
one, you're taking a huge risk with your
financial resources. If something unfortunate
happens to you that you require long term care
services, an inadequate insurance policy will not
be able to support your long term care expenses.
You may be forced to clean out your savings
accounts or even liquidate your investments.
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Types of Inflation Riders for Your LTC
PolicyThere are several types of inflation
riders for your long term care insurance the
guaranteed purchase option, simple inflation or
compound inflation. The first one is the
guaranteed purchase option or GPO. This option is
highly recommended if you are in your 70s. This
is either built in at no cost up front, or adds a
minimal charge (about 2 or so). With this
option, your insurance provider can offer you an
increase in your daily benefit with no additional
underwriting every two or three years.
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The second option, which is the simple inflation,
automatically increases the original daily
benefit by 5 every year. This is recommended if
you are in your 60s. The third option is the
compound inflation. This is highly recommended if
you are purchasing LTCi early or if you are under
60 years of age. With this option, the daily
benefit doubles in fourteen and a half years
because there will be an additional 5 to the
daily benefit, which is compounded annually.
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You can choose to add long term care insurance
inflation protection to your LTCi policy. It can
help protect you from the rising long term care
costs. If you are considering purchasing LTCi,
make sure that you talk to your insurance agent
about this option so that you will not end up
being underinsured. You can also get a free
estimate online if you want to know how much it
will cost you to add inflation rider to your
policy.