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Compound Inflation

Quick Answer

A rider on a Long-Term Care Insurance policy where the benefits (daily or monthly benefit and benefits pool) increase by a specific rate compounded every year. Generally, the percentage available in most states is 1% through 5%. This compound inflation rider is available with the purchase of the rider at additional cost. The difference between a compound and simple inflation rider is not significant in earlier years but becomes greater as time goes on. The type of inflation options may determine if a Long-Term Care Insurance policy qualifies for "partnership" certification.

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Detailed Answer

A rider on a Long-Term Care Insurance policy where the benefits (daily or monthly benefit and benefits pool) increase by a specific rate compounded every year. Generally, the percentage available in most states is 1% through 5%. This compound inflation rider is available with the purchase of the rider at additional cost. The difference between a compound and simple inflation rider is not significant in earlier years but becomes greater as time goes on. The type of inflation options may determine if a Long-Term Care Insurance policy qualifies for "partnership" certification.

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