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Do You Need Long Term Care Insurance Inflation Protection?

Inflation Protection...what happens to your benefits when Long Term Care costs rise or do you need long term care insurance inflation protection?

 
PRLog - Nov. 26, 2011 - *INFLATION PROTECTION: "Do you need it?"

Inflation protection is the most important option to have in a Long Term Care Insurance policy. This benefit increases the daily or monthly benefit amount  as well as the maximum benefit amount, aka "pool or money" over time to keep pace with inflation and increased cost of expenses.  Even though your benefits are increasing each year, your premium does NOT automatically increase.  LTC Financial Partners, LLC recommends you speak to a long term care insurance specialist to find out which inflation protenction best enhances your LTCi policy. In laymans terms, you should have a LTCi policy that will address the current cost of care and by enhancing your policy with inflation protection you will have a policy that will deal with the future.

Common inflation protection choices include the following:

•5% Compound Inflation Protection
•5% Simple or Equal Inflation Protection
•Future Purchase Option or Guaranteed Purchase Option (FPO or GPO)
•Consumer Price Index Inflation Protection (CPI)
•3% Compound Inflation Protection
•4% Compound Inflation Protection

The Main Inflation Protection Options for Long Term Care Insurance:

Long Term Care Insurance policies using automatic increase of benefits for inflation use either simple or compound rates.  The daily or monthly benefit increases, using a fixed percentage for either the life of the policy or for a fixed period (usually 10, 20, 30 years). Virtually every policy offered through LTC Financial Partners, LLC includes all inflation protection options to deal with high rise of Long Term Care.

5 % Simple (Equal) Inflation Protection:

With simple (equal) inflation protection, the benefit increases by the same dollar amount each year.  A $100 daily benefit increasing 5% per year will increase by $5/day per year and become a $200 daily benefit in 20 years.  Here's the math: $100 base + ($5 x 20 years) = $200

5% Compound Inflation Protection:

With 5% compound inflation protection, the benefits increase each year by a higher dollar amount than simple.  A $100 daily benefit, for example, will become a $265 daily benefit in 20 years. Compound inflation protection can make a big difference in the amount of benefit you can receive over the years.  If your life expectancy is beyond 15 years, it is typically better to go with 5% compound inflation protection.  However, if your life expectancy is 15 years or less, you might want to consider 5% simple or equal inflation protection because it will be less expensive.

3% and 4% Compound Inflation Protection:

Two other types of inflation protection options, 3% and 4% inflation protection, are offered by a few companies in some states.  Be careful in selecting these lower rates, however, because they are a bit less on premium, but the difference between 5% compounding and 3% compounding will be significant in 25+ years.  These types of inflation protection might be a better fit only for people who buy Long Term Care Insurance in their mid 60's.

Consumer Price Index (CPI):

One last type of inflation protection for Long Term Care Insurance offered by a few carriers within the past couple of years is the Consumer Price Index, or CPI inflation protection.  This inflation protection engine will increase your Long Term Care Insurance benefits at the actual CPI Index, computed by the US Government.  Over the past 30 years it has averaged around 4.2%. The biggest risk to the consumer is that medical costs may rise more quickly than inflation as a whole.

Future Purchase Option or Guaranteed Purchase Option (FPO or GPO):

Future purchase option  or Guaranteed Purchase Option is an inflation protection usually offered by the Long Term Care Insurance company every three years with an existing policy. If you turn down the option to increase your benefit, you may not be offered the option again.  If you accept the option, the amount of coverage increase will be based on your current age (not policy purchase date).  GPO or FPO is an excellent featue if you can't afford an insurance premium with a higher inflation protection, get in early and increase later!

LTC Financial Partners believe strongly that Inflation Protection is the most important feature of your policy, especially if you are 65 or younger, as you hopefully won't use the policy for years to come (if at all!).  But consider this 7 or of 10 us will need more than just traditional medical insurance or Medicare after the age of 65.

You have found one of the single best sources of information on long term care insurance.  We are a licensed independent insurance agency that specializes in Long Term Care Insurance.  Our mission is to provide you with excellent service, helpful advice and useful resources nationwide. Find out more about Long Term Care insurance from Kurt Lauman a Long Term Care Insurance Specialist & Partner with LTC Financial Partners, LLC. (LTCFP) *Be sure to visit website for FREE Online Long Term Care Insurance Quotes from the America’s “Top” LTC Insurance Carriers & Official LTCI eGuide “Dignity For Life!”

Author & Main Contact:

Kurt Lauman
Long Term Care Insurance Specialist & Partner
LTC Financial Partners, LLC

Long Term Care Insurance Website:
http://www.kurtlauman.ltcfp.com

Long Term Care Insurance Quotes:
http://www.kurtlauman.ltcfp.com/freecustomquote.aspx

Long Term Care Insurance Customer Comments:
http://www.kurtlauman.ltcfp.com/CustomerComments.aspx

*Any Use of this article without written concent by the author or main contact is copyright infringement

# # #

You have found one of the single best sources of information on long term care insurance. We are a licensed independent insurance agency that specializes in Long Term Care Insurance. Our mission is to provide you with excellent service, helpful advice and useful resources nationwide. Find out more about Long Term Care insurance from Kurt Lauman a Long Term Care Insurance Specialist & Partner with LTC Financial Partners, LLC. (LTCFP) *Be sure to visit website for FREE Online Long Term Care Insurance Quotes from the America’s “Top” LTC Insurance Carriers & Official LTCI eGuide “Dignity For Life!”

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Contact Email:
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Source:Kurt Lauman a Long Term Care Insurance Specialist
Phone:425-216-4909
Zip:98033
City/Town:Kirkland - Washington - United States
Industry:Finance, Insurance, Business
Tags:long term care, long term care insurance, long term care insurance quotes, Long Term Care Insurance Reviews, Kurt Lauman
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