Long Term Care POLICY RIDERS: Inflation Protection

5% Automatic Compound Inflation Protection Rider

The provisions in the sample long term care insurance policy clearly state the specific conditions under which benefits will not be paid. Most policies contain provisions similar to those outlined below.

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This Rider provides for an automatic Benefit increase of five per cent (5%) per year, compounded annually.

This Rider is part of the Policy to which it is attached if it is referred to on the Schedule of Benefits page of the Policy. This Rider provides coverage as described below.

Automatic Compound Inflation Protection

Your Benefit amounts shown on the Schedule of Benefits page of Your Policy will automatically increase each year with no corresponding increase in premium. The amounts of the increases are equal to five per cent (5%) of the Benefits amounts in effect at the end of the prior Policy Year.

If You have received any Benefits under the Policy, then with regard to the Total Lifetime Benefit, the Needs Assessment Benefit and the Informal Caregiver Training Benefit Amounts, the five per cent (5%) increase will be applied to the remaining amounts.

The Benefit amount increases will occur on each Policy Anniversary for the lifetime of Your Policy, even when You are receiving Benefits. These increases will be made without regard to Your age, claim status, claim history, health, or the length of time You have been covered under the Policy.

Your premium is not expected to increase as a result of the benefit amount increases provided by this Rider. However, We reserve the right to adjust premiums an a class basis.

COMMENT: By paying an additional premium, you can purchase this rider which is basically an inflation protection rider. It provides for a 5% increase in your Benefits limits every year with no corresponding increase in policy premium. You do, of course, pay a level annual premium for the rider. With regard to set amount Benefits which diminish as they are used (the Total Lifetime Benefit, the Needs Assessment Benefit and the Informal Caregiver Training Benefit), the 5% applies to whatever has not been used.

Premiums for the policy may be increased on a class basis, but it is not likely that policy premiums will be increased because of

Benefit increases resulting from this rider.

Limitations

No increases will be made if nonforfeiture coverage is in effect under the Policy.

COMMENT: A premium increase that might otherwise be due under this rider will not be applied if the policy is in the nonforfeiture coverage period. The policy will only have nonforfeiture coverage if it has been purchased as a rider. Nonforfeiture coverage for a premium provides a type of extended coverage after premiums are no longer being paid under the policy.

Effective Date of This Rider

This Rider takes effect on the Rider Effective Date shown at the bottom of this Rider.

Termination of This Rider

This Rider will end on the earlier of:

  1. the last day of the Policy Month in which We receive Your written request to end this Rider. In this case, You must return the policy to Us. We will change the Policy and return it to You;
  2. the date on which the Policy ends; or
  3. the date nonforfeiture coverage becomes effective under the policy.

Premium for This Rider

The premium for this Rider is shown on the Schedule of Benefits page of this Policy. The same conditions that apply to the premium for the Policy will apply to the premium for this Rider.

In all other respects, the provisions and conditions of the policy remain the same. This Rider is subject to the provisions of the Policy which are consistent with this Rider.

Rider Effective Date: 00/00/00