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What is the difference between a simple and a compound inflation rider on a long-term care insurance policy?

Last Updated: March 25, 2008

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Inflation protection on a long-term care policy increases the amount of benefits over time. A “compound” inflation rider results in a larger benefit increase than a “simple” inflation rider, but it also costs more. The difference is that a simple inflation rider is calculated on the original benefit amount, while the compound inflation rider is based on the (inflation-adjusted) amount from the previous year.

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