he message for you in this on claim! Just 30 years from now,
article is highly important that $150 current cost per day
for you to grasp. It is all will grow to $600 per day
about protecting the daily or ($219,000 each year). In 45 years
monthly benefit you choose at the the costs will be nearly $450,000
time of application from the HUGE each year -- for EACH
impact of future inflation. person!!
Choosing the correct inflation
What if BOTH you and your
protection rider is absolutely spouse go on claim?
critical for anyone under the age
Now, all of the above figures
of 75 when they buy LTC coverage. are based on 5% inflation. There
Those over 75 should seriously are two types of costs that over
explore their inflation time, have risen faster than most
protection options too!
others. Those costs are college
Why? Because if care costs costs and medical expenses! And
$150 per day today where you 5% is a pretty reasonable bet
live, at over the next few decades. But
just 5% inflation, 20 years from what if medical cost rise even
now it will be about $400 per faster?
day. That is $12,000 per month or
Now back to inflation
$144,000 per year -- and the protection and LTC policies.
costs will keep growing.
There are a few different
And everyone knows that options that one has -- to make
lifespans in north America the daily or monthly benefit
continue to rise and the chosen today, provide real and
population of those aged over 90 meaningful protection when you
is one of the fastest growing are LIKELY to go on claim.
segments!
The first type of inflation
If you are 55 now, it may be protection is the OPTION to buy
30-40 years before you would go more daily benefits at given
intervals (usually every year or inflation protection is called
every other year) -- WITHOUT SIMPLE (or Equal) inflation. This
medical questions or raises your daily or monthly
examinations. This is the least benefit by 5% of the ORIGINAL
beneficial for you because you benefit amount each year.
will spend so much more money
For easy math, if you had a
over the long run.
$100 daily benefit to start with,
Unfortunately, without the the next year your benefit would
help of an experienced LTC go to $105 per day. The next year
specialist (such as enrolling in to $110. In 20 years your benefit
a group LTC policy at work) this would double to $200 per day.
is a huge mistake that MANY Every year the increase would be
people make because in the short JUST $5 more (or 5% of the
run, it seems less expensive.
original benefit) than the year
Simply put, as you get older, before.
you can't afford to buy the
The best type (for most people
bigger increases needed to pay under age 72) of inflation
for the future costs of care protection to get is called
since the increases get bigger... COMPOUND Inflation. This is based
every year you get older!
on 5% as well -- BUT it is
So what is cheap in the very growing by 5% of the LAST year's
short run, quickly becomes the amount.
worst and most expensive option!
It works just like a bank
Then you stop buying bigger account, the more that is in
benefits and you will lose ground there, the FASTER it grows.
to inflation. Worse yet, many Instead of the figure of $200
years from now the policy will above, having compound inflation
NOT do the job you bought it would grow to $265 per day in
for.
just 20 years. That is a $65 per
The next basic type of day or nearly $2,000 per month
difference in your favor. having inflation protection is
And more importantly, every BUILT in to your premium. So just
year beyond that it grows faster because your benefits go up every
and faster. This is the best way year to protect against
for most people to have a inflation, it does NOT cause your
meaningful benefit when they go premium to go up every year.
on claim twenty years or more in
When one selects Compound
the future. For those likely to inflation, there is a pretty cool
go on claim 30 - 50 thing that happens.
years from now (you are in your
NO MATTER how young one is and
thirties or older now), this is no matter how many years of
the ONLY inflation protection to premiums they pay to the
consider.
insurance company, with compound
Now some companies have inflation they will get back ALL
slightly different spins on these of the premiums (in terms of
basic inflation protections. For benefits) in less than a year of
example, a few insurers have a claim. That is true if they go on
Compound option as described claim in 10 years... or 60
above, but offer a cheaper years.
alternative as well. On the
cheaper option the compounding
STOPS growing WHEN the benefit type="text/javascript">
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