COST OF LTC
The cost of Long Term Care Insurance can vary depending upon your age, your health, the amount of coverage you choose, and any special options you may choose. Long Term Care Insurance is a necessity in today’s world and can be affordable if you buy at the right time and choose your benefits wisely. You must find the balance between too little insurance and too much insurance, since you after all, may never use it.
The following are a few variables that may affect your LTC insurance cost:
Age: Your age will affect your premium about 3% to 5% per year. You should be cautious and through and never rush when analyzing all of the differences in the Long Term Care policies , even though some pushy “live” insurance salesmen may try to pressure you to immediately buy because of an upcoming birthday.
Health: Your health can dramatically affect the price of the policy and may even disqualify you from a policy all together. Some people will wait to buy a policy and because of a sudden onset of an illness or accident will be labeled “uninsurable” by the insurance companies, and will lose all the assets they have worked so hard to acquire to the high cost of nursing homes. It always better to buy Long Term Care insurance while you are healthy (and young).
Options: There are many options or “riders” that you may purchase. Some make sense, but many can just substantially increase the cost of the policy. It is best to ask for the advice of a profession like Long Term Care Associates in selecting the appropriate options. Beware of insurance agents pushing options that you will never need just to increase the cost of the insurance.
Discounts: There are married and preferred discounts available, which can substantially lower the cost of the insurance. Be sure and inquire what discounts are available. These discounts often apply to brother and sister.
Longer Elimination Period: The elimination period is the time you pay out of pocket before the policy starts to pay. Increasing you elimination period from 0 to 90 days can save you 10% to 15% annually.
Annual Premium Payments: You can save up to 8% just by sending your payment in one lump sum on the yearly anniversary date of your policy. Don’t worry, your insurance company will send you an annual reminder of the premium.
If you wait to buy a policy, the premiums will raise dramatically (typical policy increases):
(last column is x .66)
- PURCHASED AGE 50 COST OF PREMIUM $1587 $1047
- PURCHASED AGE 55 COST OF PREMIUM $1843 $1216
- PURCHASED AGE 60 COST OF PREMIUM $ 2355 $1554
- PURCHASED AGE 65 COST OF PREMIUM $ 3024 $1995
- PURCHASED AGE 69 COST OF PREMIUM $ 3966 $2617
How people pay for long term care insurance
People have found unique and effective ways to pay for and help with the cost of Long Term Care Insurance. Many people who have their home paid off can afford to use part of their return on their investments and part of their Social Security payments to pay for policies.
Here are a few of these ways:
- Use the interest from a savings account
- Use the interest from a CD (certificate of deposit)
- Use their Social Security to pay for premiums, while living off the income of their assets
- Many married couple live off of the spouses Social Security while both living off of the husband’s Social Security
- Using the dividend income from stock that they own
- Some retirees use the income from a part time job
- Using the interest income from an annuity
Cost of waiting to buy Long Term Care insurance
Please note that a person waiting may not be able to buy LTC Insurance at any cost, because due to a sudden illness or accident, the Insurance companies may not sell him a policy and he/she may be considered “uninsurable”.
- $130 daily benefit or $3900 monthly
- 2 year benefit period
- 100 day elimination period
- 5% compounded inflation rate
AGE YRLY PREMIUM TOTAL PAID TO 85 YRS TOTAL BENEFITS
AGE 55 $1255 $37650 $410,150
AGE 60 $1548 $38700 $321,350
AGE 65 $2090 $41,800 $251,800
AGE 70 $3136 $47,050 $197,300
AGE 75 $4965 $49,650 $154,600
The example above shows that the earlier you purchase insurance, the more benefits you will receive due to 5% policy benefit compounding and the premiums you pay when your 55 will be lower than the one you would pay at 70, and typically the total premiums paid will be less.
Therefore, Long Term Care Insurance purchased at an earlier age typically has have smaller premiums, less total premiums, and much more benefits, due to the compounding benefits. Also, by waiting to purchase LTC insurance, you run the risk of not being able to be insured due to a future illness or accident. Buy early.
Percentage of people denied Long Term Coverage at vaious ages accroding to the 2011 Source Book for Long Term Care Insurance Information
- Under age 50 11% were denied coverage
- Ages 50 to 59 17% were denied coverage
- Ages 60 to 69 24% were denied coverage
- Ages 70 to 79 45% were denied coverage
Can Insurance companies increase my premiums for Long Term Care Insurance in the future?
The answer to this question is a qualified, “Yes”. Insurance companies can never increase your policy premium individually. However, insurance companies can increase all the policyholders of a certain policy, but they must request it and only if approved by your state’s Department of Insurance. Long Term Care USA can show you the select few Insurance companies that have never request a rate increase in your state. Just fill out the form below to request information.
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Carriers quoted will vary from state to state.)