Are long-term care insurance benefits keeping up with inflation?

Whether your long-term care insurance benefit keeps up with inflation depends on the policy you choose.

Mascot / Getty Images

Inflation was a hot topic over the last few years and for good reason. Prices are rising faster than they should in a healthy economy. Food, housing, and general goods and services aren’t the only areas where prices are rising. Long-term care costs are also significantly higher now than they were just a few years ago.

This in turn begs the question: Are long-term care insurance benefits keeping up with inflation?

After all, when you invest in a long-term care insurance policy, you do this to ensure access to the care you may need in the future. And if your policy benefits don’t keep up with inflation, those benefits may not be enough to pay for your care.

Buy long-term care insurance now to make sure you get the care you deserve later.

Are long-term care insurance benefits keeping up with inflation?

“Inflation, or rising prices over time, is something that has always existed,” says Ronnie Thompson, investment advisor representative and owner of True North Advisors.

Thompson says that over time, your long-term care insurance the amount of compensation may deteriorate due to inflation, but does not have to. “Many long-term care benefit providers offer inflation protection through cost-of-living premiums that can be added” to your policy.

Your cost of living rider options

A cost-of-living rider usually comes with options. Thompson says that in most cases, “those riders have a 3% or 5% increase in the amount of the benefit each year to keep up with inflation.” You also have the option of having your benefit amount “grow at a simple or compound growth rate,” according to Thompson.

If you choose the simple rate option, your benefit amount will increase by a fixed 3% or 5%, whichever you choose. So, Thompson explained, if your benefit amount is $100 per day, the daily benefit amount will increase by a flat $3 or $5 per day each year.

But there is a trade-off to the higher growth potential associated with the compound growth option. “Simple growth will be cheaper than compound growth,” says Thompson.

Buy a long-term care insurance policy that keeps up with inflation now.

How about hybrid life insurance with long-term care?

It is important to note that while long-term care insurance and hybrid life insurance with long avg care can offer similar coverage, they are two completely different types of insurance policies.

“Some life insurance policies have a death benefit that can be used for long-term care needs,” says Patrick Simasko, elder law attorney and financial advisor at Simasko Law. But these benefits are unlikely to keep pace with inflation.

This is because hybrid life insurance with long-term care only provides a percentage of the death benefit to cover the cost of long-term care, and there will be no cost-of-living adjustment.

Other factors to consider when buying long-term care insurance

Did your long-term care insurance benefits keeping up with inflation is an important consideration, but it’s not the only factor to consider when buying a policy.

Here are some other important aspects of long-term care insurance that you should compare while shopping for a policy:

  • Other riders: Riders add bonuses to your long-term care insurance policy, and the rider’s cost of living isn’t the only thing to consider. others popular long-term care insurances include spousal benefits, inheritance, return of premium and cash benefits. Consider how each can help you achieve your long-term care goals as you shop for your policy.
  • Location Requirements: Some long-term care insurance policies only pay for your care if you move into a nursing home or assisted living facility. This can create a problem if you want to age in place. The good news is that there are many policies that will cover your care whether you are at home or moving into a facility. Just make sure you know what each policy covers before you buy one.
  • Care providers: If you want to age in place, caregivers may be part of your plan, but some long-term care insurance companies only pay formal caregivers. If you want your policy to pay your friends and family to look after youmake sure it covers both formal and informal carers before you register.
  • Coverage amount: Whether your long-term care insurance policy keeps up with inflation won’t matter if you don’t have enough coverage in the first place. Think it over how much care you may need and how much that care costs. Then build a plan around the most accurate estimates you can find.

Find a long-term care insurance policy that fits your plans today.

The bottom row

Long-term care insurance doesn’t always keep up with inflation, but it can. By adding in the cost of living when you buy your long-term care coverage, you can make sure your benefit grows with inflation. This way, you can be sure that your policy benefits will not lose their purchasing power over time.

Leave a Comment

Your email address will not be published. Required fields are marked *