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Introduction to LTC and LTCI
LTCI Basics
How Can LTCI Keep Up With Inflation? |
 Introduction Main Page Long Term Care Basics Long Term Care Insurance Basics
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How Can Long Term Care Insurance Keep Up With Inflation? If you buy your coverage 20, 10 or even 5 years before you use it, the benefit amount you choose will almost certainly be too low to cover the increased costs of care. That’s why most plans offer inflation protection. The FLTCIP offers the choice of an Automatic Compound Inflation Option or a Future Purchase Option.Automatic Inflation Option An Automatic Inflation Option means that the value of your insurance will increase each year by a set rate (e.g., 5% annually). While the initial premium is higher with this option, you will not have to think about future inflation increases, as they are automatic, with no commensurate increase in premium. Be sure you know the set rate and if the increase is simple or
compound. A compound increase provides the
most protection. Future Purchase Option A Future Purchase Option allows you to choose to increase your benefits periodically, such as every second or third year. Each time you buy additional coverage, your premium will go up. If you accept the option regularly and haven’t become eligible for benefits, you don’t have to show proof of good health. However, if you decline the option a certain number of times — even once with some plans — you may have to provide medical information satisfactory to the insurance company to have access to the inflation increases again. Your initial premium is lower under this option, but it will increase significantly if you take a number of these inflation offers. Most plans increase your benefits and premiums only if you accept the offer when it’s presented. The Federal Program increases them unless you decline the offer. |
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