In a previous blog post, we discussed how much in annual premium it would cost for an initial benefit pool of $1,000,000 using the latest premium rates from four (unnamed) LTC carriers.

Solving for the premium is often an approach that is used in buying insurance products such as term life or long-term care.  However, what if we want to instead solve for the benefit using a combined couple's premium of $5,000?

In this example, we look at the initial benefit pool for plans with both an automatic 3% compound (or CPI) inflation rider and the same carriers with no automatic inflation coverage. 

For a 50-year-old couple choosing 3% compound (or CPI coverage), the results are fairly similar - about $500,000 in coverage with similar daily benefit and benefit periods. Another way of looking at that is $1,000 in premium will give someone about $100,000 in benefits.

On the other hand, choosing no inflation resulted in dramatically different benefit amounts. Carrier 2 plan benefits for no inflation were $390 per day for a five-year benefit period for both spouses. It may be the smart choice is actually buying a lot of coverage up front instead of waiting for the automatic inflation coverage to catch up.

Take a look at the graph below and comment: