My husband and I are interested in LTC insurance. We met with a representative this past Tuesday who told us about their LTCI plan covering nursing home, assisted living, in-home care and dementia. My husband just turned 50 and I am 44 years old. We both are non-smokers. The representative quoted us $1930 premium with a built in simple 5% increase annually to cover inflation. Is this rate high, average or low for this kind of coverage?

The premium is on the low side. You didn’t tell me the daily benefit, benefit period, elimination period or level of home care that you’re looking at, but I will tell you that you are much, much too young to even consider a 5% simple inflation factor. I recommend 5% compound to most people and nonnegotiable for people 70 and under. My books (The ABC’s of Long-Term Care Insurance and the more detailed Long-Term Care: Your Financial Planning Guide) are available on this website if you want to see details on how to compare benefit features…but just know that the inflation coverage is one of the most important considerations to deal with. If the benefit is too small at claim time and you can’t make up the difference, you will be very unhappy. Make sure you have an adequate daily or monthly benefit, an elimination period (deductible) that you can afford at future prices, not just today’s prices, and the 5% compound inflation coverage. After that, adjust the benefit period to what is affordable. (Note: Suze Orman’s The Classroom at has a wonderful section about inflation coverage. You can get a password to it from her book The Money Class.)

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