The importance of long term care insurance as a piece of an income plan was underscored during a recent presentation at a conference on longevity.
Financial advisors contacted by National Underwriter affirmed the importance of having LTCI to ensure that income planning in retirement years is effective.
The presentation was made during the “Living to 100 Symposium” sponsored in January by the Society of Actuaries, Schaumburg, Ill. During the session on LTC insurance and underwriting challenges at the oldest ages, Stephen K. Holland, M.D., a senior vice president and medical director with Long Term Care Group, Inc., Eden Prairie, Minn., detailed data his company has gathered on LTCI, which underscores the importance of having a plan in place.
During his presentation, Holland discussed data from a Framingham study which shows that between ages 85-93 the number of those with Alzheimer’s type dementia skyrockets to about 70 per 1,000 in men and 145 per 1,000 in women compared with a respective 38 and 82 showing between ages 80-84.
The LTCG data underscores the importance of putting the LCTI piece of an income plan in place early in the income plan’s development.
Of a total of 8,929 fully underwritten applicants age 80 and older, the acceptance rate was 35.8% while 64.2% were declined. Between the ages of 80 and 95+, acceptances decline dramatically and declinations increase substantially. At age 80-84, acceptances totaled 41% and declinations 59%, a ratio that changes to a respective 26% to 74% at ages 85-89; 16% to 84% at ages 90-94; and, 6% to 94% at 95+.
And yet, in the 80+ age group, dementia and cognitive impairment lead the list of most frequently paid claimed events with 27% of the total followed by fractures/injuries with 12.4% and stroke with 12.3%, the LTCG data indicates.
The data also shows that the growth in paid benefits per dollar of premium collected goes from approximately 27 cents in the 80-84 age group to about $2.60 in the 95+ age category.
Ellen Dorle, a certified financial planner based in Columbus, Ohio, says it is “almost mandatory” to have LTCI, particularly if a client has significant assets. It is akin to having homeowner’s insurance in that you hope you don’t have to use it but want to have it, she explains.