Our employer is offering unum ltc insurance at a group rate. For a 47 year old, 4 yr coverage @ 4k, monthly premium is $20.30. When I chose the compounded option, monthly premium jumps to $59.10.
I called they company and they said it is compounded at 5% per year.
My other thought was to go with 8k coverage, no inflation for $44.00 per month.
Is there anyone out there who understands this stuff and would please give me any guidance?
Thank you!

Long-term care policies for seniors living in major metropolitan areas with high labor costs can expect to pay $167 per day for nursing home care. This translates into $61,000 per year. If a consumer purchases a policy that pays a fixed $100 per day, with an inflation rate of six percent per year, $100 per day will pay less than one-third of the daily cost in 12 years, and 14% of the cost in 24 years.

The math is easy. At six percent inflation the cost of nursing care will double every 12 years and the daily charge will become $354. In twenty-four years the same nursing charge will have grown to $708 daily. So a consumer who purchases today at age 56 a long-term care with a fixed benefit of $100 per day who requires nursing-home care at age 80 will have to pay more than 85% of the costs out of his or her own pocket.

The answer is to purchase compounded inflation protection that increases the benefit the policy will pay each year. Since health-care costs predictably will continue to inflate, the U.S. House Select Committee on Aging concluded that “without inflation protection, long-term care insurance policies are not a wise purchase.”

Five percent compounded inflation protection. Rather than increasing the daily benefit by five percent of the original benefit, this option increases the benefit by five percent compounded, meaning that each successive year’s benefits are increased by five percent over the previous year. The compounded option at 5% compounded per year will pay approximately $265 per day, after twenty years. This approach is the best option available, but given the historical, as well as anticipated, six percent inflation rate for long-term care costs, this plan does not keep pace with inflation.

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