Compound interest calculator for LTCI with inflation protection

The Cosmic Avenger

Thinks s/he gets paid by the post
May 9, 2016
Every so often I decide to figure out how much LTC coverage I have NOW with my "inflation protection". I finally decided to make a spreadsheet; you're welcome to make a copy. I hadn't used the FV (future value) formula before to calculate compound interest, so I thought it might be of interest to the rest of the Forum:


The FV function uses the following syntax:


  • rate: interest rate
  • nper: number of periods
  • pmt: payment made each period (optional, if you're calculating loan amortization, I guess)
  • pv: starting value
The "interest" rate is fixed at 5% so I just put that off to the side in cell F3; I put 0 for pmt, and for number of periods I used YEARFRAC, which reads the dates and gives the value for the number of years in between. The full formula for cell C3 is =FV(F3,YEARFRAC(B2,C2),0,-(B3))

So, for those who are Google averse, I wound up with this, and all I have to do is update the current date and it will update the last column for me:
Contract startDate to calculate
Nursing facility (month)$4,000.00$9,052.02
Residential care (month)$2,800.00$6,336.41
Home/community care (day)$66.67$150.87
Lifetime maximum$144,000.00$325,872.58
Or just x*(1+i)^p =4000*(1+5%)^(2023-2006.25) = 9057

Copy and paste the underlined into a cell and you'll get 9056.9287
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You likely need to add a "Denial Factor" in to your calculations to account for the probability that your claim(s) will be denied by the insurer. I'd put that factor at 50%, if not higher.
So, nay idea how much in premiums have you've paid up to this point, actual and inflation-adjusted?
So, nay idea how much in premiums have you've paid up to this point, actual and inflation-adjusted?
$19.20 per month from 4/2007 until 01/2021, when my employer stopped offering the coverage, then after I took it over it's been $50.40/month, so $4,982.40 in actual dollars so far, and as far as I know $604.80 per year from here on out. You're welcome to figure out the value in today's dollars if you're so inclined.
We bought LTCi about 10 years ago...we were in our early 50s then. Just last month got our first premium price increase...about 8%. We looked at policies that had inflation protection, but they were completely unaffordable. Instead, we opted to "overbuy" coverage in hopes that it will be worth something when we need it. We bought about 4x what a person would normally need. This turned out to be less expensive (about 1/3 the cost) of the inflation-protected policies. Yes, it's a bit of a gamble but I just couldn't stomach paying $16k/year for our policies.

Another thing to consider is whether your state has an asset protection agreement (better known as "partnership policies") in regards to your insurance level...ours does. This protects at least the insured amount from spend down towards Medicaid asset levels if things get really bad in terms of your health. Most states have reciprocity today so that even if you move to another state, you are likely protected in the new state.

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