A 55-year-old considering long term care insurance can expect to pay $709 per year for each spouse if married or $1,095 for an individual policy, according to the 2008 Long Term Care Insurance Price Index.
The calculations are for a policy carrying a $100 maximum daily benefit for up to 3 years.
If purchased at age 65, that same policy would costs $1,342 per year for a spousal policy and $1,999 for an individual policy, according to the index, which is calculated by the American Association for Long Term Care Insurance., Westlake Village, Calif.
Last year’s index showed a 55-year-old married individual buying coverage could expect to pay $665 a year for each partner for the same policy. If single, the annual cost would have been $1,075.
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The AALTCI index measures current costs for top-selling LTC policies that offer around $115,000 in current benefits, with protection increasing yearly at a compounded 5% rate. Average prices were for a policy covering home care as well as skilled care and with a 90-day elimination period.
That original $115,000 in coverage would grow to over $305,000 of protection in 20 years, estimates Jesse Slome, executive director of AALTCI.
For a policy offering a $150 maximum daily benefit, the cost at age 55 for each partner would be $1,064 a year and $1,578 for a single individual, according to the 2008 index.
If purchased at age 65, the annual cost of that same policy would be $2,013 for a spousal policy and $2,998 for an individual.
On average, LTC premiums are up about 4% from last year, reports AALTCI.
In recent years, LTCI price increases have ranged generally from 2% to 6%, depending on the type of policy, Slome says.
“The analysis highlights the benefits of obtaining coverage at younger ages and taking advantage of discounts offered to those in good health as well as to couples,” he says.
Slome points to another AALTCI study showing that 51.5% of individuals in their 50s qualify for health discounts, significantly more than the 42.2% of applicants in their 60s who qualify.
“It’s never an economic advantage to wait [to buy the insurance],” Slome said. “Costs do increase from year to year.”
Moreover, a change in health could make it impossible for an individual to qualify for a policy, he says.
Slome points out, too, that individuals sometimes need LTC when they are in their 50s or 60s. “Some 12.5% of new claims filed in 2007 start before the individual turned 70,” he said.
Because of inflation, the individual who waited to buy a policy at age 65 would need a higher level of initial protection than he or she would have needed at 55. AALTCI calculates that a policy offering a $150 daily benefit to a 55-year-old today would require a daily benefit of $240 10 years later, assuming 5% annual compound inflation.