Average policy cost increases from prior year

The average cost for a 55-year-old purchasing long-term care insurance is $772-per-year. The average annual cost for a 65-year-old is $1,456, according to the 2006 Long Term Care Insurance Price Index reported by the American Association for Long Term Care Insurance.

The index measures policy costs for typical comprehensive long term care insurance policies that offer policyholders the ability to receive care either at home or in a skilled care facility.

“The cost for long term care insurance protection varies by the age, marital and health status of applicants, as well as the level of coverage purchased and even the state of residence,” says Jesse Slome, executive director of AALTCI. “The 2006 national study compared policies offered by insurers that make up roughly 90 percent of all policies sold in the United States.

“For 2006, the average cost for a 55-year-old who qualifies for both preferred health and spousal discounts is $772 for a 3-year policy that provides roughly $110,000 in current protection,” says Slome. The study only compared costs for policies that include a compound inflation option. “The policyholder’s benefits increase at five percent compounded annually, so if care is needed in 15 years the $65-a-month policy premium provides up to $227,823 in benefit payments,” Slome says.

The average premium for a 65-year old who qualified for a spousal or partner discount, but not the preferred health savings was $1,456-per-year. “Health changes as we age, and less than a third of those who apply in their sixties qualify for preferred health discounts, versus 44 percent who qualify in their fifties,” Slome says. “The ability to lock in good health discounts can save you 10 percent to 20 percent yearly.”

According to the industry organization, costs for LTCI tended to increase, compared to 2005 premiums reflecting the lower interest rates available to insurers, as well as newer generations of insurance policies introduced during the year.

2006 National Long-Term Care Insurance Price Index

Source: American Association for Long-Term Care Insurance Released June 1, 2006

Average price for a comprehensive long-term care insurance policy (100% home care benefit + skilled care coverage), 90-Day Elimination Period with Compound Inflation Protection Option