| The message for you in this article is highly | | | | amount each year. |
| important for you to grasp. It is all about | | | | For easy math, if you had a $100 daily benefit to |
| protecting the daily or monthly benefit you | | | | start with, the next year your benefit would go |
| choose at the time of application from the | | | | to $105 per day. The next year to $110. In 20 |
| HUGEimpact of future inflation. | | | | years your benefit would double to $200 per day. |
| Choosing the correct inflation protection rider is | | | | Every year the increase would be JUST $5 more |
| absolutely critical for anyone under the age of 75 | | | | (or 5% of the original benefit) than the year |
| when they buy LTC coverage. Those over 75 | | | | before. |
| should seriously explore theirinflation protection | | | | The best type (for most people under age 72) of |
| options too! | | | | inflation protection to get is called COMPOUND |
| Why? Because if care costs $150 per day today | | | | Inflation. This is based on 5% as well -- BUT it is |
| where you live, at just 5% inflation, 20 years | | | | growing by 5% of the LASTyear's amount. |
| from now it will be about $400 per day. That is | | | | It works just like a bank account, the more that |
| $12,000 per month or $144,000 per year --and | | | | is in there, the FASTER it grows. Instead of the |
| the costs will keep growing. | | | | figure of $200 above, having compound inflation |
| And everyone knows that lifespans in north | | | | would grow to $265 per day in just 20years. |
| America continue to rise and the population of | | | | That is a $65 per day or nearly $2,000 per |
| those aged over 90 is one of the fastest growing | | | | month difference in your favor. |
| segments! | | | | And more importantly, every year beyond that it |
| If you are 55 now, it may be 30-40 years before | | | | grows faster and faster. This is the best way for |
| you would go on claim! Just 30 years from now, | | | | most people to have a meaningful benefit when |
| that $150 current cost per day will grow to $600 | | | | they go on claim twenty years or more in the |
| per day ($219,000 each year). In 45years the | | | | future. For those likely to go on claim 30 - 50 |
| costs will be nearly $450,000 each year -- for | | | | years from now (you are in your thirties or older |
| EACH person!! | | | | now), this is the ONLY inflation protection to |
| What if BOTH you and your spouse go on claim? | | | | consider. |
| Now, all of the above figures are based on 5% | | | | Now some companies have slightly different spins |
| inflation. There are two types of costs that over | | | | on these basic inflation protections. For example, a |
| time, have risen faster than most others. Those | | | | few insurers have a Compound option as |
| costs are college costs and medicalexpenses! And | | | | described above, but offer a cheaperalternative |
| 5% is a pretty reasonable bet over the next few | | | | as well. On the cheaper option the compounding |
| decades. But what if medical cost rise even | | | | STOPS growing WHEN the benefit doubles. |
| faster? | | | | I have never recommended this option. There are |
| Now back to inflation protection and LTC policies. | | | | better ways to structure a policy which will cost |
| There are a few different options that one has -- | | | | less in premiums and actually pay MORE when |
| to make the daily or monthly benefit chosen | | | | you go on claim. |
| today, provide real and meaningful protection | | | | Please note that the cost of having inflation |
| when you are LIKELY to go on claim. | | | | protection is BUILT in to your premium. So just |
| The first type of inflation protection is the | | | | because your benefits go up every year to |
| OPTION to buy more daily benefits at given | | | | protect against inflation, it does NOT causeyour |
| intervals (usually every year or every other year) | | | | premium to go up every year. |
| -- WITHOUT medical questions orexaminations. | | | | When one selects Compound inflation, there is a |
| This is the least beneficial for you because you will | | | | pretty cool thing that happens. |
| spend so much more money over the long run. | | | | NO MATTER how young one is and no matter |
| Unfortunately, without the help of an experienced | | | | how many years of premiums they pay to the |
| LTC specialist (such as enrolling in a group LTC | | | | insurance company, with compound inflation they |
| policy at work) this is a huge mistake that MANY | | | | will get back ALL of the premiums (in terms of |
| people make because in the shortrun, it seems | | | | benefits) in less than a year of claim. That is true |
| less expensive. | | | | if they go on claim in 10 years... or 60 years. |
| Simply put, as you get older, you can't afford to | | | | **** Mark Jeffrey Shopping Tip. It is pretty rare |
| buy the bigger increases needed to pay for the | | | | that my clients do not see the importance of |
| future costs of care since the increases get | | | | Compound inflation protection and choose this |
| bigger... every year you get older! | | | | option. If budget is an issue |
| So what is cheap in the very short run, quickly | | | | (as it is for most people) I would stick with a |
| becomes the worst and most expensive option! | | | | short and fat policy WITH compound inflation. For |
| Then you stop buying bigger benefits and you will | | | | more FREE consumer LTC shopping tips you can |
| lose ground to inflation. Worse yet, manyyears | | | | go to |
| from now the policy will NOT do the job you | | | | Since 1997, Mark Jeffrey, a Certifeid Financial |
| bought it for. | | | | Planner, has helped hundreds plan ahead for Long |
| The next basic type of inflation protection is called | | | | Term Care expenses using discounted LTC |
| SIMPLE (or Equal) inflation. This raises your daily or | | | | insurance from the top insurers & smart benefit |
| monthly benefit by 5% of the ORIGINAL benefit | | | | planning strategies. |