The Benefits of Inflation Protection

It's always reported in the news that the long term care costs in certain state have increased by some percent. It's not surprising or you wont consider it as phenomenal, since you're getting used to the rants of your grandparents or older relatives on how expensive long term care is.
The rates of nursing homes and assisted living rise almost every year. In 2008, a year stay in a private nursing home room amounted to $80,000, but within three years, the rate have increased to over $252,000. Imagine how much would the increment be in the next five to 10 years? For sure, the costs can wipe out a person's finances.
So how can you protect yourself from the rapidly increasing costs of long term care? A policy with inflation protection, or insurance rider, is the best means to cope with the yearly increase on long term care. There are four options for inflation protection that should suit your age.
No Inflation Protection
Most people think of not getting an inflation protection, and, otherwise, buy daily benefits that are under their budget. People above or in their 80s do not necessarily need some form of inflation protection.
Guarantee Purchase Option
This is also called as COLI or future purchase. It adds minimal charge of 2 percent or more. In this option, the policy benefiys may increase within two to three years depending on the written agreement, without extensive and additional underwriting. However, the disadvantage of this option is that the increased amount varies on the current age of the insured. This type is appropriate for people in their 70s.It also allows the policyholder to purchase additional coverage for future use. If you are on claim, or refused to use this option many times, it will become unavailable. This can be expensive because the person's current age will always be considered, not the age at the time of purchase.
Simple Inflation
This option adds 40 % to 60% in the insurance premium. Simple inflation automatically adds 5 percent on the daily benefits on a yearly basis. One advantage of this is the daily benefits can double within 19 and a half years. This is a big help for the insured to use the money in keeping up the cost of long term care.This type is suitable for people in their 60s.Compound InflationOne of the best options is the compound inflation. With compund inflation, your policy benefits increase faster than the simple inflation. This adds 5 percent on your daily benefit and is compounded annually, the daily benefit, in return, doubles in 14 and a half year versus the 19 years in simple inflation. People below 60 years old should resort to using this inflation protection type.
If you're buying long term care insurance policy, always think twice of getting an inflation rider. Remember that the future costs of your LTC will not be the same as it were today or in the last five years.  Now, think again. With an inflation protection, your daily benefit may increase each year at fixed percentage, meaning you can save money that can be used to compensate the increase in the costs of LTC.