Assumptions:

• LTC policy is purchased at age 55
• Care is needed at age 75 for five years for a total claim of $764,473 - using a 5% compound cost projection
• Benefits purchased: $150 daily benefit, 30 day elimination period, lifetime benefit period
• Premiums: no inflation: $1,035, Simple inflation: $1,602, 5% compound inflation: $1,984
• Total charge for five year period: $764,473, using a 5% compound cost projection

Totals No Inflation 5% simple 5% compound Premium: $19,664 $30,438 $37,696 Insurance Benefits $269,250 $552,413 $753,102 Out-of-pocket * $514,888 $242,499 $49,067

* out-of-pocket = insurance premium + difference in benefits vs. charges

To summarize this example, investing the premium difference of $949 between 5% compound vs. no inflation for the 20 year period before claim at 10% return yields $59,789 before taxes and investment fees, which barely makes a dent in the $495,223 difference between the $764,473 charge and the $269,250 insurance benefits without inflation coverage. (For that matter, saving the entire premium of $1,984 for the 5% compound benefit at 10% for 20 years only results in $124,997 before taxes and investment fees.)