Depending upon your age, when buying your long-term care insurance policy, you may be better off buying a higher Daily Benefit with a 3% Compound Inflation Benefit rather than a lower Daily Benefit with a 5% Compound Inflation Benefit.
In some situations, it might be possible to purchase a $220 Daily Benefit with a 3% Compound Inflation Benefit for the same (or less) premium than a $150 Daily Benefit with a 5% Compound Inflation Benefit.
| 3% Compound |
5% Compound |
|
| Starting Daily Benefit | $220 | $150 |
| After 10 Years | $296 | $244 |
| After 20 Years | $397 | $397 |
| After 30 Years | $534 | $648 |
You can see from the chart that for the first 20 years or so, the strategy of choosing a higher Daily Benefit with a 3% Compound Inflation Benefit can be a better value than choosing a $150 Daily Benefit with a 5% Compound Inflation Benefit.
If your primary concern is protecting assets for your own (and your partner’s) financial independence, then you may be better off with the higher Daily Benefit amounts in the earlier years of the policy.
If it’s very important for you to protect assets for heirs or charity, then you should probably be more conservative and go with the 5% compound.
For more guidance on choosing the Inflation Benefit for your long-term care policy, click the following link:
http://ltcshop.wordpress.com/category/ltci-basics/inflation-benefit/
