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 long-term care 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. Important: 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.
