Report: What People Pay For LTC Health Insurance

Over a third (35.4%) of individuals with recently-purchased long-term care insurance protection pay less than $1,499-per-year according to a new report issued today by the American Association for Long-Term Care Insurance the national trade organization.   Among buyers under age 61, 43.5 percent pay less than $1,499 annually, whereas 73.6 percent of buyers between ages 61 and 75 pay $1,500 or more.

“Individuals mistakenly have been led to believe that long-term care insurance costs thousands of dollars,” states Jesse Slome, AALTCI’s executive director.  “A significant number of individuals today pay between $10 and $20 a week.  That’s a highly affordable way to protect $150,000 to $250,000 of future care.”

The organization analyzed data on some 93,500 new long-term care insurance buyers.  Among buyers under age 61, over one-fourth (28.1%) paid less than $999-per-year.  Fewer than one in 10 (9.3%) pay $3,500 or more annually the report notes.  “What you pay for long-term care insurance is based on things you can control and factors you can not change,” Slome explains.  “You can control and make protection highly affordable by comparing coverage, by taking advantage of discounts and by looking at newer options that were not available a few years ago.”

Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports.  While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.  “The typical buyer today is in their 50s,” Slome notes.  “That’s when you can lock-in lower costs and more important qualify for significant health discounts that you don’t lose when your health changes.”

Nearly one in 10 (9.5%) of all buyers paid $4,000 or more yearly for their insurance protection the AALTCI report indicates.  “Only six percent of buyers under age 61 pay this much,” Slome notes, “while 28.2 percent of buyers age 76 or older did.” 

AALTCI 2010 Report:  What People Pay For Long-Term Care Insurance

Premium Amount           Under Age 61           Age 61-75         Age 76 And Older

Less than $500                2.0%                        0.2%                 0.9%
$500 – $999                   26.1%                        9.5%                 9.8%
$1,000 – $1,499              15.4%                      11.3%               11.4%
$1,500 – $2,499              24.1%                      31.6%               19.5%
$2,500 – $3,499              11.8%                      20.7%               24.0%
$3,500 – $3,999                3.3%                        6.4%                 6.8%
$4000 and Over               6.0%                      14.9%               28.2%
Source:  American Association for Long-Term Care Insurance ( analysis of data based on individual Partnership policy sales, June 2010. 

Three Tips For Saving Money When Buying Long-Term Care Insurance

The American Association for Long-Term Care Insurance suggests the following tips that can help you significantly reduce the cost of insurance coverage.

1.  Leverage Your Good Health:  Insurers will require you meet certain health qualifications to obtain coverage.  Discounts are provided to those in good health and 62 percent of applicants between ages 40-49 qualified in 2009.  The percentage drops to 46% for ages 50-59 and only 38% for ages 60-69.  Once obtained, the preferred health discount is not lost when your health changes. 

2.  Right-Size Your Coverage:   Some long-term care insurance is always better than none.  Factor in other sources of income such as Social Security, pension and 401k plans that can pay costs and allow you to add money-saving options such as a 90-day deductible (Elimination Period) or consider a limited-pay plan with a Shared Care option that allows two spouses to share a common benefit pool.

3.  Compare Coverage:   Each insurer establishes it’s own rates, health standards and available discounts.  As a result, virtually equal protection from two highly-rated insurers can vary by between 30 and 80 percent.   Ask your insurance professional if they have access to policies from just one or from multiple insurers.

For more information, visit the Association’s Consumer Information Center:

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