Inflation gnaws on everything, including your Long-Term Care (LTC) insurance benefit. However, more and more insurance companies are offering a Guaranteed Payout Option (GPO) – also known as a Future Purchase Option (FPO) – policy rider that can ease the bite.
Says American Association for Long Term Care Insurance (AALTCI) director Jesse Slome, “A GPO allows more people to buy coverage they can afford. You can lock in meeting the required good health qualifications ,along with the advantage of lower rates, plus you still have the ability to increase coverage in future years — an extremely attractive combination.”
Buying a GPO will add 2% to 3% to your annual LTC premium, depending on your age when you exercise the option. The daily benefit increases more rapidly in the early years of the policy – an advantage for those 70 or older, who are likely to need long-term care fairly soon; it will be less of a bargain for younger people unless they’re prone to illness.
A large number of insurance companies offer GPOs or FPOs. Some companies allow you to increase coverage every two or three years, while others won’t offer this option if you reject hiking coverage two or more times in a row.
Standard “simple inflation” and “compound inflation” LTC riders differ from GPOs because they increase the AAbenefit automatically. A simple inflation rider increases the original benefit by 5% a year, while a compound inflation rider would boost the benefit by 5% compounded annually.
For a complimentary review of which LTC inflation rider would be best for your situation, feel free to get in touch with the Health insurance specialists at our agency.