Page 43 - Growing Old Without a Plan for Long Term Care is not for Sissies_Neat

Long Term Care Insurance: How Does This Stuff Work? 25 Total Beneft This is simply a multiplication of the beneft amount times the beneft period. The result is the “Pool of Money” available to pay for your long term care expenses. For example, a monthly bene- ft of $6,000 with a beneft period of 48 months results in a total beneft of $288,000. This beneft is used to pay for your long term care until it is exhausted. So in this example, if your cost of care is less than $6000 per month your “Pool of Money” would likely last longer than 4 years. Infation Protection Earlier I mentioned that the cost of long term care is increasing at up to 5% per year. Because of this, it is necessary to build some kind of infation protection into the policy. This is usually one of the following: f 5% Compound Infation Protection-Your beneft increases each year by 5% of the previous year’s beneft. f 5% Simple Infation Protection-Your beneft increases each year by 5% of what the initial beneft amount was when you purchased the plan rather than the previous year’s beneft as in compound infation protection f 3% Compound Infation Protection-Just like 5% compound except 3% is used instead. f Consumer Price Index Infation Protection-Similar to 5% or 3% compound infation protection but instead of increasing at a pre-set percentage, your beneft increases each year based on the measure of the Consumer Price Index. f Guaranteed Purchase Option-You have an option every few