Be aware that some long-term care insurance policies offer Inflation Benefit options that stop growing at a certain point. Another way to say this would be that the Daily Benefit (or Monthly Benefit) has a “cap” on it.
For example, an Inflation Benefit might be described as “5% Compound 2X”. That means that the Inflation Benefit would stop increasing the Daily Benefit once the Daily Benefit has doubled.
Another example, would be an Inflation Benefit that is described as “5% Compound 20 years”. That means that the Inflation Benefit will stop increasing the Daily Benefit after you’ve had the policy for 20 years.
IMPORTANT NOTE: Depending upon your age and your state of residence an Inflation Benefit that has a cap on it may not qualify for “dollar for dollar asset protection” under your state’s Long-Term Care Partnership program.
You need to be aware of the different types of Inflation Benefit, so that when you’re comparing long-term care policies you’re comparing “apples-to-apples”.
Sound advice: Do NOT buy a policy that has a cap on the Inflation Benefit, if, for about the same premium, you can get a comparable policy that does not have a cap.
