Long-term care costs rise each year and inevitably will continue to, so it’s important to understand how you can leverage your insurance and use the power of inflation protection.
How does inflation protection work?
Inflation protection in a long-term care insurance policy helps protect against the rising costs of care. There are different types of inflation protection. One of the most common types is 3% compound.
Compound inflation is basically interest on interest. It has a snowball effect that increases your benefits at a faster pace than simple interest.
When you buy a policy in your 40s, 50s or 60s, it’s likely that you won’t need care for 10 to 30 years, so it’s important to think about how far your dollar will go in the future. 
If you buy a policy with 3% compound inflation at age 55, with a monthly benefit of $6,000, by the time you’re 80, your benefit will have increased to $12,562 per month.
When you buy a policy with guaranteed automatic inflation protection, you can rest assured that your monthly benefit and total bucket of money will grow as care costs increase.
If you’re over the age of 70, you may choose to increase your monthly benefit to offset the rising care costs instead of buying the inflation protection because the rider may be too expensive.
The Bottom Line
Inflation protection is an important feature to consider in a long-term care insurance policy.