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Example: If you choose a policy without
inflation protection with a $100 Daily Maximum and a Maximum Lifetime
Benefit of $36,500, your policy will only pay $100 a day even if the
daily cost of care has increased to $200 and the cost of one year of
long-term care has increased to $73,000 in fourteen years. If you choose
Built-in 5% Compound Inflation Protection, the Daily Benefit will be
$200 a day and the Maximum Lifetime Benefit will be $73,000 in fourteen
years. If you choose Built-in 5% Simple Inflation Protection, the Daily
Maximum Benefit will be $170 and the Maximum Lifetime Benefit will be
$62,050 after fourteen years. Remember: the cost of long-term care will
double every 14 years if inflation continues at the current rate of
5% and your income is unlikely to keep up with inflation after retirement.
In most cases, you will be better off purchasing a
policy with a lower Daily Maximum Benefit plus 5% compound inflation
protection than selecting a policy with a higher Daily Maximum Benefit
with no built-in annual inflation increases in benefits. This is because
you are paying a higher premium in the early years for a higher daily
benefit than you need, and as the years go by the benefit continues
to decrease in relation to the cost of care. However, before you make
a decision, you might want to consult with a financial planner, an attorney,
a HICAP counselor or a family member.
With the Benefit Increase Option, your premium will
increase each time you choose to accept the insurer's offer to increase
the coverage amounts. The premium increase for each benefit upgrade
will be based on the amount of coverage added and your age at the time
you exercise the Benefit Increase Option. Because rates for older individuals
are significantly higher and you will be older when each upgrade is
offered, each Benefit Increase Option you accept will result in a larger
premium increase than the prior offers. The advantage of the Benefit
Increase Option is that the initial premium you pay for the policy will
be much lower than if you choose the Built-in Inflation Protection Option.
However, in the long run, you may end up paying more in total premiums
to protect your benefits against inflation protection because of the
additional premiums you must pay to purchase each Benefit Increase Option.
And, as you get older and the premiums for the benefit upgrades get
larger with each offer, you may not be able to afford the offer to upgrade
your benefits unless your income increases significantly in retirement
or you have substantial savings. In the long run, however, policies
with built-in inflation protection are probably more cost-effective
and the premium payments more predictable than the benefit increase
option.
The graphs below illustrate how annual premiums for
policies purchased at age 45 or 65 will differ over time for the Benefit
Increase Option (dotted line) versus 5% compound Built-In Inflation
Protection Option (solid line). (The graphs assume that inflation continues
at 5% per year). The annual premiums you will pay if you accept each
benefit upgrade option will rise over time under the Benefit Increase
Option, while annual premiums for policies with Built-In Inflation Protection
are designed to remain level. The Benefit Increase Option is therefore
best suited only for those who expect to have increased income or assets
or reduced financial obligations in the future.
ANNUAL PREMIUMS
Benefit Increase Option vs. Built-In Inflation Protection Option
Premiums with Benefit Increase Option (----------------)
Premiums with Built-In Inflation Protection Option (___________)
Premium Discounts and Other Premium-Related
Benefits
The premium you will pay may be adjusted from the 'normal' rate for
a single individual. Many companies offer discounts if both spouses
purchase Long-Term Care Insurance. Several provide discounts for those
who do not use tobacco products and are the most healthy. Some companies
provide that the policy of the surviving spouse is 'paid-up' when the
first spouse dies - no further premium payments are required. A qualified
agent can assist you in reviewing the options available.
Long Term Insurance
| Bluecross Long Term |
California Long Term Insurance
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Long Term PPO plans|
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Term Dental Insurance |
Long Term Group
Insurance | Long Term Blueshield
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Long Term Health
plans | Long Term Health net
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Term Medical Quote |
Long Term Aetna
PPO plans | Long Term Insurance
Quote | Long Term HMO plans
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Long Term Life
Insurance | Long Term Dental
plans
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