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How do I select an inflation rider on a long term care insurance policy?

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The carriers has re-priced their products, so I don’t have a standard recommendation based on age of the applicant.   Here is an approach that may be helpful to you in the current environment.

What is the cost of care increase in the recent years?  Let’s say it is 5% each of the last 5 years. Of the current monthly cost in your locale, how much do you want insurance to pay vs. your personal funds?  This is your monthly benefit.

Now inflate that monthly benefit by 5% and what is the premium?

Next, using the approximate premium, what monthly benefit could you start at today at a 4% or 3% compound inflation.  3% compound is a “sweet spot” for pricing.

Now, try to anticipate the age you will expect to need assistance with your activities of daily living (bathing, dressing, eating, transferring, toileting, and continence or a cogitative impairment).  This will give you data from which you can make a decision.

An insurance broker who is independent (not only showing you one carrier) can assist you with this analysis.  Education is key in making any financial decision.  Long term care planning is just one of those important decisions.  Insurance funds a plan. 

For more information on long term care planning go to www.baygroupinsurance.com