Long Term Care Insurance Question Pennsylvania PA

Reader’s Question:

I have long term care insurance policy in Pennsylvania. How can I protect myself from possible inflation? Inflation might hurt my benefits and my money invested in my insurance. Is there something I can do about this?

Janine

Allentown, PA

Hi there, Janine.

The truth is, you never run out of options in the event of inflation. Although there are things that can protect you from inflation, these might not provide you full protection. As inflation is one of the most inevitable events in economics, it would not really matter what type of insurance options you choose since all will naturally lose some value over time with any insurance policy when inflation happens. But there are things you can do to minimize the losses somehow.

First, you always have the option to buy some more coverage. If an insurance agent would promote one, you can take this as a means for you to protect yourself from inflation. Though the fact of the matter is, it can be the worst and most expensive option since what you’re doing is trying to buy more commodity which will decrease value over time.

Another option is indexed inflation which allows you to increase the amount your policy will pay every so often. This cannot be very ideal though since this increases your premium and inflation adjustment is not much of a help if costs of long term care continues to increase than the average rate.

A marginally useful means is simple protection which increases your daily benefit received in the event of a claim by a fixed percentage each year. Because cost of long term care increases at a faster rate than simple protection, this might not be very useful in the long run.

Last but not the least is the compounded protection which increases the daily benefit by a certain percentage each year with compounded increase. Compounded inflation protection might not be perfect too since the policy losses value over time, but among your choices, this is probably the best.