Will payouts keep pace with inflation?
- What is long-term care insurance?
- What will a long-term care policy cover?
- How much will payouts be?
- Will payouts keep pace with inflation?
- How much will a policy cost me?
- When do I stop paying premiums?
- Should I buy a long-term care policy?
- At what age should I buy long-term care insurance?
- What should I look for in a long-term policy?
Only if you pay for inflation protection - and you should. It is crucially important that if you purchase LTC insurance, you make sure your policy includes an annual inflation adjustment rider. It will do you little good to buy a policy today that has a $180 daily benefit if the cost of care rises to $400 a day or more in the future. The inflation rider will increase your daily benefit coverage by a set amount each year.
To protect yourself, buy a policy with a benefit that increases by 5% compounded a year. Be careful: Don't go for "simple" interest. Inflation grows at a compounded rate. In 20 years, a $100 daily benefit would turn into $200 with 5% simple interest. Compounded, the benefit would be $265.
