The just-released 2020 Long-Term Care Insurance Price Index for 55 year old purchasers reported pricing for single men, single women as well as couples.  The American Association for Long-Term Care Insurance released data from its annual pricing study that has tracked costs data for over two decades.

“In general costs remained virtually identical to last year,” reports Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).  The organization compared current pricing for the leading insurance carriers that sold new coverage in 2019.

According to the Association’s 2020 Price Index, the average annual premium for a 55-year-old couple was $3,050, the same as the prior year.   For a single male, age 55, the average cost reported is $1,700 that was significantly lower than the prior year.

“There’s no special reason that the average rate declined,” Slome shares.  “It’s likely that some of the higher-priced companies have stopped selling large number of policies.  What remains consistent is the importance of working with an insurance professional who has the ability to compare multiple insurers and is appointed with those offering high quality coverage for a significantly lower price.”

For a single female the average cost going into 2020 is $2,650, about the same as the prior year’s study findings.

Price For Virtually Identical Coverage Continues To Vary Significantly

The Association reports that the spread between the lowest and highest cost for virtually identical coverage was typically just over 100 percent.  “Each insurance company sets their own pricing for coverage, it is up to the consumers to compare if saving money is important,” Slome adds.

The Association’s 2020 Long-Term Care Insurance Price Index shared planning and savings strategies that can be utilized by couples.   “There are ways to protect yourself and save money that agents may fail to suggest but in my opinion are worthy of consideration,” Slome noted. For example, Slome recommends married couples ask about the shared care option where one spouse had future access to the benefit pool of the other spouse or partner.  “Or, ask for pricing for a two (2) percent inflation growth option rather than the standard three (3) percent which agents often default to,” he adds.  These features are not offered by all insurers the Association points out making comparison shopping vital.

To obtain long term care insurance quotes from a professional with expertise specifically in long term care insurance products offered by multiple leading companies call the national organization at (818) 597-3227 or visit the Association’s website at www.aaltci.org.

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Risk of long term care insurance rate increases, credit: American Association for Long-Term Care Insurance study, September 2018

Los Angeles, CA – September 17, 2018 – Individuals who purchase a new long-term care insurance policy face little if any chance of a future rate increase according to a study of pricing experts released by the American Association for Long-Term Care Insurance.

“Policies priced years ago using different assumptions have seen rate increases so consumers today assume they face the same risk,” explains Jesse Slome, director of the Association.  “That’s simply not the case.”  The national organization just released results of a poll of actuaries across the long-term care insurance industry.

“Most actuaries responding see little or no the risk of needing future rate increases on recently priced policies,” according to Slome.  Some 79.1 percent of the responding actuaries expressed the risk was 10 percent or less.

Older long-term care insurance policies priced 10 or 20 years ago used different pricing assumptions and generally had specific policy provisions that necessitated the need for increases.  “Back in the 1990s, long-term care insurance was a new form of protection and there just wasn’t the data available,” Slome notes.  “With several decades of experience and millions of policies sold and hundreds of thousands of claimants, policies priced today can more accurately project important aspects.”

Rate of Future Increase Is “Zero”

“I believe the risk of a future rate increases is zero,” projects Slome.  “Rising interest rates and the new regulations mean someone purchasing a new long-term care insurance policy in 2018 and 2019 faces little if any chance of a future rate increase,” Slome projects.  “Older policies with provisions like unlimited policy benefits or compounded annual benefit increases of five percent may face rate increases, but even these are never take-it or leave-it propositions.  Insurers always offer options that enable the policyholder to avoid the increase.”

For the study, the American Association for Long-Term Care Insurance polled nearly 80 LTC industry actuaries.  The professionals who price insurance policies were asked their assessment for policies now being sold that were priced within the past two years.

According to the Association, some eight million Americans have some form of long-term care insurance in place.  The vast majority of policy owners have what is called a traditional, health-based policy.  Over the past few years, sales of linked-benefit or life insurance policies that offer an option for long-term care benefits have increased in popularity.

The American Association for Long-Term Care Insurance advocates for the importance of planning and helps consumers connect with knowledgeable professionals who are independent advisors.   Consumers looking for local long-term care insurance agents or cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.

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According to the 2013 National Long-Term Care Insurance Price Index released today by the American Association for Long-Term Care Insurance prices for long-term care insurance policies are higher as a result of increasing care costs and significantly lower interest rates that factor heavily into policy prices.   In 2012, the organization noted identical coverage cost $1,720 annually.

“Persistent low interest rates and yields on fixed income investments continue to push costs for various insurance products higher,” explains Jesse Slome, AALTCI’s executive director. “Long term care insurance policy sales are up as consumers recognize the importance of planning and show greater acceptance of policy options that offer greater affordability.”

The Association analyzed costs for 12 leading insurers for single individuals and couples between ages 55 and 65.   Rates varied quite significantly for virtually identical policy benefits Slome reported.   “For a 55-year-old single policy applicant the highest priced policy cost 87 percent more than the comparable lowest priced policy,” Slome notes.  “For a couple both age 60, there was a 92 percent difference and no single insurance company always had the lowest price.”

Slome advocates a “Good, Better, Best Approach” to long term care insurance protection that offers greater flexibility and affordability.  “There is no one-size-fits-all policy choice that suits everyone,” Slome advises.   “Some protection is always better than none and coverage that does not include a costly inflation growth option is an affordable option,” Slome says.   According to the Association study, a couple where both spouses are age 60 will pay a total of $1,816 annually for $162,000 of coverage for each person.  “A good long-term care insurance option takes into account the future availability of savings, Social Security benefits and investment retirement income to supplement insurance coverage,” Slome explains.  “Increasing benefits are not an option that everyone today needs or wants to pay for.”

For the first time, the Association’s Price Index examined rates from insurers offering a Future Purchase Option (FPO) that allows the applicant to lock in their health insurability and add to their coverage periodically.  “A better approach is selecting a starting point for benefits that can be added to later where underwriting won’t get in the way,” Slome advises.  “The FPO option adds about five percent to the cost but offers enormous value in terms of future flexibility.”   Not all insurers offer this option, he shares, and currently and the Association found a 40 percent price differential between the lowest and highest priced policies with this feature.

Historically, most long-term care insurance policies purchased by individuals have included the added option that increased benefits to keep pace with growing care costs.   “Five percent was established as the norm in the 1990s when double-digit inflation was a recent memory but much has changed over 20 years,” Slome explains.  “Today, a three percent yearly increase in benefits is considered the best option for those willing to pay the higher cost.”  A couple both age 60 will pay $3,725 yearly for coverage that grows to $329,000 for each when they reach age 85.  Comparable coverage cost $3,381 according to AALTCI’s 2012 Price Index, a 10 percent increase.

“The Good, Better, Best approach to long term care insurance planning makes enormous sense today,” Slome concludes.  “The timeworn one-and-done approach to long-term care insurance planning worked when buyers were in their late 60s and early 70s,” Slome concludes.  “With typical LTC insurance buyers now in their mid-50s, flexibility and the ability to change as personal and economic circumstances change is not just desired, it’s significantly more affordable.”

“There’s never been more interest in long-term care insurance as millions recognize the costs associated with living a long life,” states Larry Moore, Director of Marketing for American Independent Marketing, a leading national marketer that assisted the Association in compiling the Price Index information.   “With more options and ways to make protection affordable available today, long-term care insurance can be far more attractive than many people think.”

The complete 2013 Price Index will be published in the Association’s 2013 Long-Term Care Insurance Sourcebook.  For more information, visit the American Association for Long-Term Care Insurance’s website at www.aaltci.org or call (818) 597-3227

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