Elect or decline Automatic Benefit Increase (ABI) option. (additional cost)
Under this option, each year on May 1 your DMB amount increases at a rate of 5% compounded, with no annual increase to your premium. The DMB increases continue annually regardless of your age or whether you have met the benefit eligibility requirements under the policy.
No future increases in the benefit amount will apply if you stop premium payments and continue coverage under the Nonforfeiture Benefit.
Example of electing Automatic Benefit Increase:
If Vicki signs up for Long Term Care Insurance with a DMB of $150 and the Automatic Benefit Increase option:
- Year 1 her DMB is $150.
- Year 2 her DMB increases to $157.50. ($150 x 5% = $7.50; $150 + 7.50 = $157.50)
- Year 3 her DMB increases to $165.38. ($157.50 x 5% = $7.88; $157.50 + 7.88 = $165.38)
Her DMB continues to increase by 5% each year with no increase to her premium payments.
Future Purchase Option
If you do not select the Automatic Benefit Increase Option, the Future Purchase option is automatically included in your coverage.
Under this Inflation Protection option, you are offered the opportunity to purchase additional amounts of coverage every three years to keep up with inflation. The amount of each adjustment reflects a benefit increase of at least 5% compounded annually for the applicable period. The LMB amount increases with the increase in the nursing home DMB.
The premium rates for the additional coverage:
- are based on your age on the effective date of the increase, and
- include an additional charge to account for the added risk associated with purchasing additional coverage without having to submit EOI.
An inflation adjustment is not available if:
- you are 85 years old or older,
- you have met the benefit eligibility requirements under the policy in the six months prior to the increase effective date, or
- your coverage is in reduced paid-up status under the Nonforfeiture Benefit.
