Most LTCI policies have five foundational features. These include the daily benefit, the benefit period, the benefit setting, the elimination period and the inflation protection benefit. All five of these features have a major impact on the care you will receive under the policy guidelines. You select your own daily benefit, based on your individual needs. Although the daily benefit is one of the most flexible features of the policy, it's imperative to get it right the first time!

The daily benefit simply states how much the policy will pay out in benefits per day. Some policies pay out benefits based on a daily limit; others multiply that daily amount by 30 to establish a monthly benefit amount. Whatever method the policy uses, the process always begins with figuring how much you will need, on a daily basis, to pay for care.

You can easily determine a reasonable daily benefit amount by calling local nursing facilities and home health care agencies to find out what the cost for these services average in your area. When making these calls, be sure to ask what the costs are for long-term care room rates, not short-term rehabilitation room rates, which are typically much more expensive. There can often be a considerable difference in cost between private and semi-private rooms as well, so get rate quotes for both. It's very important that your daily benefit adequately covers the costs of care in a facility, which is sometimes the greatest expense.

Once you have an idea of the daily long-term care expenses that will be involved, the next step is to decide how much of that daily amount that you could reasonably co-insure out of your own funds. When making this calculation, keep in mind that whatever funds you will provide for your own care must be kept in an investment vehicle that you can access easily if and when you need to.

Some people think that they have to over-inflate the daily benefit amount to be sure that they can keep pace with the rising costs of care. However, while it's true that long-term care costs are rising so rapidly that a suitable daily benefit today may be only half of what is needed in just fifteen years or so, this shouldn't be a factor in your decision. In a well-designed LTCI policy, the inflation protection benefit keeps the daily benefit current with rising costs.

The effectiveness of the inflation protection benefit is closely connected to ensuring that the daily benefit that you choose at the inception of the LTCI policy is as accurate as possible. So do your homework and use these guidelines to select an appropriate daily benefit for your LTCI policy. It will give you the protection you need now and many years into the future as well.