2007 LTC Insurance Price Index Highlights Benefit Of Buying Early

Another reason for buying relatively young is the increased likelihood of obtaining a preferred health discount, Slome says. AALTCI found 44% of applicants in their 50s qualify for preferred health discounts, compared to 32% of those who wait until their 60s to apply.

Individuals age 55 considering a policy that currently provides $150 per day might expect to pay $1,027, assuming they qualify for spousal and preferred health discounts, AALTCI found. If they wait until age 65 to buy the same coverage but no longer qualify for the good-health savings, they would pay $1,939 yearly–assuming insurance prices didn’t increase over the decade they waited, Slome adds.

“But 10 years from now, you will actually need to buy a higher benefit amount to keep pace with inflation,” he points out.

In 10 years, at 5% annual growth, an individual would need to buy a $240 daily benefit to be equal with today’s $150-per-day benefit, according to the Price Index. The average cost for a $240-per-day benefit would range from $3,272 to $4,823.

The growth of new types of policies with relatively short coverage periods have helped bring the costs down, compared to the upscale policies that many agents and carriers have pushed in the past, Slome says.

“Especially to middle-income individuals, you have to start showing and telling the story that long term care insurance is affordable, and that’s one reason we did the Price Index,” he says. “It’s also the reason we chose the 3-year benefit period, because that’s adequate or more than adequate for about 92% of policyholders who’ve actually gone onto claim.”

Another development is that new policies will allow purchasers to change their coverage as their needs and assets change. “A new age of flexible coverage is upon us,” says Slome.

That’s another reason why it almost never makes economic sense for the consumer to wait to buy coverage, Slome argues.

“The industry needs to show people and financial planners that when it comes to planning long term care, it never pays to wait,” he says.

The fact that a 55-year-old or an even older individual can buy good coverage for around $1,000 is an important story the industry must start telling, he says. “Many see LTC insurance as being for the very wealthy, and that’s a place we don’t want to be.”