November 30, 2010

Long-Term Care Insurance: What It Really Costs

Report shows premiums paid by consumers are far lower than perception

If there’s one thing everyone knows about long-term care insurance (LTCI), it’s that it’s horrendously expensive and will cost thousands every year. Right?

Not necessarily. According to a new report from the American Association for Long-Term Care Insurance (AALTCI), more than a quarter of Americans under age 61 who purchased coverage in the first half of 2010 pay less than $1,000 a year.

Jesse Slome, executive director of AALTCI, said in a statement, “The single greatest misconception held by consumers is the actual cost of coverage.” He went on to explain, “Most people perceive the cost is actually quite a bit higher than the real amounts paid by large percentages of those purchasing coverage.” He attributes this to studies that average out the costs of policies and report on the results. Older consumers do pay considerably more for coverage than younger ones, as do those with health concerns, so their premiums can boost the average considerably.

According to the study, 19.4% of purchasers responding to the study who were under age 61 pay between $20 and $30 a week for new policies. More than a quarter of buyers in this age group, 28.9%, shell out between $1,500 and $2,500 a year. The rest pay more. Results also revealed that fewer than one tenth of these buyers—only 6.8%—pay $4,000 or more.

 

Buyers Under Age 61

Cost

Percentage

Less than $999

27.8%

$1,000 - $1,500

19.4%

$1,500 - $2,500

28.9%

$2,500 - $4,000

17.1%

$4,000 and over

6.8%

 

The average age for purchasers of LTCI is 57, and eight out of 10 who purchased new individual coverage in 2009 were under age 65.

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