A 55-year-old individual considering long term care insurance protection could expect to pay premiums of $665 a year if married or $1,075 if single, according to the 2007 Long Term Care Insurance Price Index published by the American Association for Long Term Care Insurance, Westlake Village, Calif.
In comparison, a 65-year-old purchasing comparable coverage would pay $1,292 a year if married or $1,923 if single. The costs are roughly the same as in 2006, says AALTCI.
Jesse Slome, executive director of the AALTCI, says the data shows LTC coverage is less expensive than many think.
The annual index measures current costs for top-selling LTC policies that offer the ability to receive care either at home or in a skilled-care facility.
In the past year, some carriers introduced new policies that provide lower-cost coverage for younger individuals who are in good health, as well as nonsmokers and individuals who are married or residing with a partner, notes Slome.
Consumers can also cut roughly 9% off costs by paying premiums annually versus monthly, plus another 8% just by being accepted for coverage before their next birthday, Slome notes.
The study compares costs for plans that provide benefits for 3 years, which Slome says is a basic level of protection for many.
The study priced plans that provide $110,000 or $172,000 in current protection ($100 a day or $150 a day for 3 years) for someone age 55. The figures in the index are averages.
Policies priced by Slome also included an inflation provision, which he asserts is an important LTC insurance option. The impact of 5% annual increases in daily benefits paid mean that a policy offering $100 in benefits at age 55 would pay $163 daily at age 65, $265 at age 75, and $339 at age 80, Slome notes.
In other words, $100-a-day benefits with 5% compounded inflation would pay $390,000 over 3 years starting when an individual reaches 80. If the benefit were $150 at age 55, it would pay $585,000 over 3 years starting at age 80, Slome notes.