How Does My Policy Work?

Earlier this month, I received an email from a client wanting to know more about her policy benefits.  What follows is the email exchange, edited to protect the policy owner's privacy.  "Susan Jones" is not her real name.  

From: Susan Jones

Sent: July 6, 2015

To: ray@LTCinsuranceGuy.com

Subject: My Policy Benefits

Hello Ray,

I am confused about my long term care insurance policy benefits.  My latest annual policy statement says my maximum monthly benefit is $3,582.16 and my Total Policy Benefit Amount is $171,943.53.  I thought my monthly benefit was $3,000 and my benefit "pool" (as you called it) was $144,000.  Thank you, Susan.

From: Ray Smith

Sent: July 7, 2015

To: Susan Jones

Subject: RE: My Policy Benefits

Hi Susan,

You are correct in that you selected an initial Maximum Monthly Benefit of $3,000 and a "Benefit Pool"* of $144,000.  However, you also selected 3% annually compounded inflation protection so both amounts have grown since your policy was issued.

With 3% compound inflation protection, on every policy anniversary your Maximum Monthly Benefit is increased by...Read More