What is an Inflation Protection Long Term Care Insurance Policy?

Q: Some of the long term care insurance policies I am researching allow for inflation protection. Can you explain what that means and what advantages it may provide?

The Problem – The Rising Cost of Long Term Care

At approximately $220 per day, the average cost for a one year stay in a private nursing home room in 2008 was approximately $80,000. With the average nursing home stay lasting approximately three years, you could spend over $252,000 if you entered in a nursing home today.

If you are 55 years old today, you should expect to pay approximately $930 for one day or $340,000 for one year of nursing home care when you are likely to need it 25 years from now at the age of 80. Based on the average nursing home stay, expect to pay approximately $1.1 million per person – easily wiping out a lifetime of savings for many families.

The Solution – Inflation Protection

A long term care insurance policy with inflation protection (IP), sometimes called an increase rider, increases your benefits each year. A long term care insurance policy without inflation decreases in value, on an inflation adjusted basis, every year the cost of long term care increases. Differentiating between the two most common forms of inflation protection is critical in determining which type is best for your needs.

Simple Inflation Protection

With simple inflation protection, your policy benefits increase at a fixed percentage of your original daily benefit. As evidenced by the chart to the right, a 5% simple IP policy will increase a $220 per day or $80,000 per year benefit to $495 per day or $180,000 per year, over the over the course of 25 years. This should cover about 53% of your daily or annual nursing home costs.

Compound Inflation Protection

With compound IP, your policy benefits increase at a significantly faster pace, as each year’s benefit increase compounds upon the previous year’s increase. As evidenced by the chart to the right, a 5% compound inflation protection policy will increase a $220 per day or $80,000 per year benefit to approximately $930 per day or $340,000 per year, over the course of 25 years. This should cover about 80% of your daily or annual nursing home costs.

No Inflation Protection

As you approach your 80th birthday, the cost to add inflation protection can become expensive. You may consider forgoing inflation protection and simply obtaining a policy with a daily benefit greater than the current cost of care in the marketplace.

Action Step – Protect Yourself with Inflation Protection

When you purchase a long term care insurance policy with inflation protection you protect yourself from the rising cost of long term care. Be sure your policy benefits increase as the cost of long term care increases or be prepared to spend significantly more out of your own pocket.

Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a NJ based Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com/services-ltci.htm or 908-464-3060.

Family Life Insurance Policies Could Keep You Financially Stable During Disasters

The family life insurance policies are the policies that cover everybody in your family right from the youngest children to parents and even grandparents of those kids.

Whenever there is any crisis the family life insurance company pays the benefit. It is always better to be financially stable than being grief stricken and financially unstable. Policies could cover the health costs for both terminal illnesses and also college tuition for the college going youngsters. You could find a variety of family life insurance plans. The best place, where you can look for information about such policies at zero cost could be the internet medium.

A simple search for family life insurance policies on any search engine will give you different plans of many companies for you to consider. You could compare plans and at times input information so as to receive quotes and approximations. This is one great way to commence looking for insurance. However, you could easily skip over few important parts of the policy documents as they are the legal documents written using legal language.

After you have done some research and sorted out few choices, it is usually a good idea to contact any broker, who knows this business and could help you feel safe in your choice of family life insurance company. Insurance brokers, who function locally, are professionals and they usually work with more than one company. You could feel confident that they will assist you in finding the best policy that suits you and your family.

Brokers do charge money at times, so it might be more beneficial to try an online insurance broker. The online brokers can’t be as intimate as the local brokers, but they can assist you through the entire process from the start to the completion. If you input all your information they could typically come up with many family life insurance company quotes and few even demonstrate them in graphs or charts that could greatly simplify the process of comparison.

Online insurance brokers actually search through many companies and offer much more quotes than the local insurance brokers because they make use of computers for doing majority of the work. They can send your details to many insurance firms and consequently receive back numerous quotes quickly with just a keystroke. If you search for online reviews you can make certain whether your insurance broker is really worth your money.

Few online insurance brokers also run on the ad revenue and they might be free for trying or for the complete process. Usually, if you are dealing with any quality online insurance site they will possess support of some sort by way of phone line or chat with some professional. No matter, which way you decide to search for family life insurance policies it is good to start searching now than to wait till it becomes too late to purchase insurance for the loved ones.

When we shop for the family, most of us buy things with maximum care, as we try to provide the best. The same concern and attention is required when we buy family life insurance too.

Missing or Lost Life Insurance Policies

Unfortunately it’s not an uncommon story; someone pays the required premiums on a life insurance policy for years and neglects, or forgets, to give the policy, or any information about the policy, to the intended beneficiary. The insured person passes, the policy documents can’t be found, if the beneficiary even knows about it, and the insurance money is never paid out. And those unpaid life insurance dollars run into the billions!

If you think that this is not happening, and you are the beneficiary on a loved one’s life insurance policy, just ask yourself these few simple questions:

1. Do you know the details of the policy?

2. Do you know the whereabouts of the policy?

3. If something happened today, would you know where to find the details?

If you answered, “no,” to any of these questions you’ve got big gaps in your knowledge which could lead to a real financial tragedy.

Further, if you even suspect that you may be a beneficiary, get the details now. Waiting until it’s too late to talk about it can, in addition to the grief caused by the passing of a loved one, cause severe financial hardship. These subjects, we know, are difficult ones to talk about. But to avoid the difficulties of not knowing, THEY MUSTBE TALKED ABOUT.

If, however, you have lost a loved one and are experiencing the difficulty of not knowing, there are some things that you can do. A few of them follow:

1. Go through your loved one’s financial documents for insurance company dividends or premium notices. Many people keep all their important documents in one place; often in a home office, a bedroom closet, or a safe deposit box at their bank.

2. Scan through their current and past checkbooks. It may be that the last premium is paid is recorded there.

3. Check your loved one’s cell phone contact lists and computer email addresses for the name of an insurance agent.

4. Get in touch with the current and/or previous employer who may have a record of a group policy. If your loved one was retired, group coverage may have been converted to individual coverage.

5. Monitor your loved one’s snail mail for a year. Watch for any correspondence from an insurance company.

6. If your loved one’s passing occurred some years ago, you can also check with unclaimed property office of any state where he/she may have lived. If an insurance company is aware of the passing of a policy holder but is unable to locate the beneficiary, after a period of time it has to turn the proceeds over to the state where policy was issued.

Finding a lost or misplaced life insurance policy can be a daunting task but there are ways… and your patience in searching could prove very rewarding. Also, there are services that will, for a fee, assist you in your search. http://www.LostPolicy.com is one such service. Insurance companies are not only willing to give the beneficiary their rightful due, they are obligated to. But it is the responsibility of survivors to make the required notifications and claim any proceeds.