Study: Individual Long-Term Care Insurance Buyers

 Individuals purchasing long-term care insurance in 2009 tended to be slightly older and selected less costly policy features according to the American Association for Long-Term Care Insurance (AALTCI) annual study.  The organization’s research was based on an analysis of 155,000 individual placed policies.

“Clearly the economy is having an impact on when individuals start their long-term care planning and what benefit levels and policy options they select,” states Jesse Slome, executive director of the long-term care insurance industry organization.  According to the annual study, 73.5 percent of buyers of individual policies were age 55 or older when they applied for coverage compared to 69 percent for the prior year (2008).

When it came to choosing benefit options, the study found a slight increase in the percentage of individuals selecting lower benefit levels and longer elimination (deductible) periods.  Both contribute to lower premium costs.  Some 43 percent of buyers selected initial daily benefit amounts of $149 or less; compared to 37.5 percent for the prior year.   The vast majority  (92.2 %) of buyers selected elimination periods of 90 days or longer; compared to 86 percent for the prior year.

 ”The most common benefit period selected remains three years,” Slome notes.  Some 29.5 percent of buyers selected a policy designed to pay benefits for at least three years.  The overwhelming majority added an inflation growth option that increased benefits each year.  “The 5 percent compound growth factor, chosen by 47 percent of buyers, can double or triple the cost of the base plan of insurance protection,” Slome adds.  “Buyers understand they are protecting future risk and saved in some areas but were willing to pay more for this important option.”

 The Association added two new areas to the 2009 study; average premium paid and marital status at time of purchase.  According to the findings, the average buyer between ages 45 and 54 paid $1,900 annually for their coverage.  “There was a significant average price range between companies,” Slome notes, “from as low as $1,000 to over $3,200 for this age segment.”

 The vast majority of buyers of long-term care insurance are married.  According to the report, some 54 percent of purchases involved couples covering both lives.  Nearly one-fourth (24%) involved couples or partners where only one individual was covered with 22 percent of policies purchased by single individuals.

The complete findings of the survey will be contained in the 2010 Long-Term Care Insurance Sourcebook published by the American Association for Long-Term Care Insurance.  Copies are mailed to all Association members in May 2010.

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