Inflation Protection
What Does 'Inflation Protection' Mean?
Usually, the policyholder can choose between Simple and Compound increases. Simple increases add the same dollar amount to the monthly or daily benefit each year.
More Information
Inflation protection is a rider available for purchase with Long-Term Care Insurance policies. This add-on can provide additional benefits over time to address the higher care costs due to inflation.
Policyholders often have a choice between simple or compound inflation protection. Simple inflation adds the same dollar amount to the monthly or daily benefit each year.
Compound inflation increases benefits by a percentage of the current benefit. Since care costs increase sporadically, compound inflation protection generally keeps pace with care costs better than simple protection.
It's also important to note that most people with a partnership Long-Term Care Insurance policy must have compound inflation protection to qualify for partnership benefits. Each state has different requirements, which you can learn more about with our article on partnership Long-Term Care Insurance policies.