Is there something called inflation protection that I need to look for in a long term care policy? What's it all about?
Total Comments: 24
Posted: Tue Dec 15, 2009 04:51 am Post Subject:
Exactly! That's the purpose of inflation protection. 5% simple adds 15-20% to the base premium, 5% compound adds about 20-30%.
Geez, Max. Stop it. Seriously. You post so much incorrect information. It just isn't ok. For somebody who isn't old, compound inflation for a policy with lifetime benefit will add over 100% to the cost.
Posted: Tue Dec 15, 2009 07:23 am Post Subject:
For somebody who isn't old, compound inflation for a policy with lifetime benefit will add over 100% to the cost.
Would you please explain that with an example? I'm sure it would help if you show how compound inflation exceeds the cost.
Posted: Tue Dec 15, 2009 11:32 am Post Subject:
From XYZ company, a $200/day policy with lifetime pay and lifetime benefits without inflation protection costs for a healthy 50 year old costs $1625. With 5% compound inflation, the cost is $4194.
Even if we make the person 10 years older and cut the benefit period down to 5 years, the compound inflation rider still increases the cost by 50%.($2821 vs. $3719)
Posted: Wed Dec 16, 2009 06:39 am Post Subject:
Guys, I've come across some interesting data regarding this, but I'm not quite sure of it. It depicts some 40% of the fresh LTC policy applicants get this inflation protection for their coverage. The chances of getting inflation protection for your policy come down as you grow older. About 59% of the applicants below 65 years of age would pick inflation protection. On the other hand, about 14% of those who're above 75 years of age would only go for it!
Posted: Thu Dec 17, 2009 04:02 am Post Subject:
A few points miscellaneous points about partnership policies:
1) Thirty states have passed legislation allowing partnership policies.
2)Not all of these 30 states actually have approved any policies as of yet.
3) Inflation protection does not have to be a compound 5%. In general, it depends on the age of the insured. The following information is true with some partnership policies, but I don't know if this is something that is the same in all states:
Age <61: Compound inflation of either 3% or 5% is mandatory
Age 61-75: Inflation protection can either be compound or simple
Age 75+: Inflation protection is not necessary.
Posted: Thu Dec 17, 2009 07:21 am Post Subject:
Actually, the sufficiency of inflation protection depends on the kind of services that a policy offers. It is determined upon a number of factors like cost of service, age of the applicant, state rules as well as the gender of the applicant. The age of policy holders who're actually using these services is around 80 years.
Posted: Fri Dec 18, 2009 09:46 am Post Subject:
I guess an inflation protection of 5% would suffice to cover more than 72% of nursing home expenses. It will also cover more than 90% of the assisted living expenses as well as that of the home visits.
Posted: Sat Dec 19, 2009 11:43 am Post Subject:
I guess an inflation protection of 5% would suffice to cover more than 72% of nursing home expenses.
When it comes to total LTC liability, a 5% inflation protection allows the policy to cover nursing home care costs worth 70%, assisted living expenses worth 82% and home care expenses worth 90%.
Posted: Sat Dec 19, 2009 12:18 pm Post Subject:
What the heck are you talking about with these percentages?
Posted: Wed Dec 23, 2009 03:33 am Post Subject:
I too would love to know what exactly those numbers mean with respect to 5% inflation covering certain percentages of different types of care.
5% simply means the daily benefit amount will frow at a rate of 5% annually some contracts allow a choice between compounded or simple.
Additionally, some contracts allow the the choice of how much coverage the daility benefit will cover things like assisted living and home care.
Posted: Tue Dec 15, 2009 04:51 am Post Subject:
Exactly! That's the purpose of inflation protection. 5% simple adds 15-20% to the base premium, 5% compound adds about 20-30%.
Geez, Max. Stop it. Seriously. You post so much incorrect information. It just isn't ok. For somebody who isn't old, compound inflation for a policy with lifetime benefit will add over 100% to the cost.
Posted: Tue Dec 15, 2009 07:23 am Post Subject:
For somebody who isn't old, compound inflation for a policy with lifetime benefit will add over 100% to the cost.
Would you please explain that with an example? I'm sure it would help if you show how compound inflation exceeds the cost.
Posted: Tue Dec 15, 2009 11:32 am Post Subject:
From XYZ company, a $200/day policy with lifetime pay and lifetime benefits without inflation protection costs for a healthy 50 year old costs $1625. With 5% compound inflation, the cost is $4194.
Even if we make the person 10 years older and cut the benefit period down to 5 years, the compound inflation rider still increases the cost by 50%.($2821 vs. $3719)
Posted: Wed Dec 16, 2009 06:39 am Post Subject:
Guys, I've come across some interesting data regarding this, but I'm not quite sure of it. It depicts some 40% of the fresh LTC policy applicants get this inflation protection for their coverage. The chances of getting inflation protection for your policy come down as you grow older. About 59% of the applicants below 65 years of age would pick inflation protection. On the other hand, about 14% of those who're above 75 years of age would only go for it!
Posted: Thu Dec 17, 2009 04:02 am Post Subject:
A few points miscellaneous points about partnership policies:
1) Thirty states have passed legislation allowing partnership policies.
2)Not all of these 30 states actually have approved any policies as of yet.
3) Inflation protection does not have to be a compound 5%. In general, it depends on the age of the insured. The following information is true with some partnership policies, but I don't know if this is something that is the same in all states:
Age <61: Compound inflation of either 3% or 5% is mandatory
Age 61-75: Inflation protection can either be compound or simple
Age 75+: Inflation protection is not necessary.
Posted: Thu Dec 17, 2009 07:21 am Post Subject:
Actually, the sufficiency of inflation protection depends on the kind of services that a policy offers. It is determined upon a number of factors like cost of service, age of the applicant, state rules as well as the gender of the applicant. The age of policy holders who're actually using these services is around 80 years.
Posted: Fri Dec 18, 2009 09:46 am Post Subject:
I guess an inflation protection of 5% would suffice to cover more than 72% of nursing home expenses. It will also cover more than 90% of the assisted living expenses as well as that of the home visits.
Posted: Sat Dec 19, 2009 11:43 am Post Subject:
I guess an inflation protection of 5% would suffice to cover more than 72% of nursing home expenses.
When it comes to total LTC liability, a 5% inflation protection allows the policy to cover nursing home care costs worth 70%, assisted living expenses worth 82% and home care expenses worth 90%.
Posted: Sat Dec 19, 2009 12:18 pm Post Subject:
What the heck are you talking about with these percentages?
Posted: Wed Dec 23, 2009 03:33 am Post Subject:
I too would love to know what exactly those numbers mean with respect to 5% inflation covering certain percentages of different types of care.
5% simply means the daily benefit amount will frow at a rate of 5% annually some contracts allow a choice between compounded or simple.
Additionally, some contracts allow the the choice of how much coverage the daility benefit will cover things like assisted living and home care.
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