180,000 Received LTCI Benefits Last Year, New Study Shows

Some of the largest open claims (those still being paid) ranged from more than $500,000 to just over $1 million, with claimants receiving benefits for between 7 and 13 years, AALTCI reports.

Most claims are from 1 to 3 years, however, notes Slome.

In 2007, 25% of all individual policies sold last year were for 3 years of coverage, while 40% bought 4 to 5 years; 11% bought 6 to 10 years, and 18% bought unlimited protection.

Sales are increasing for shorter time periods of coverage because lifetime coverage is very expensive, notes Slome. “Shorter terms make long term care insurance more affordable and expands the marketplace.”

The fast growth of partnership policies, which enable buyers to protect some of their assets from Medicaid if they exhaust their LTC policies, may also be a factor, he says. “As more people see the benefit of partnerships, that has created interest.”

The large number of people filing claims each year shows that LTC needs to be part of retirement planning, Slome adds.

Most people should begin this planning when they are in their 50s, he says, explaining that’s because individuals are far more likely to qualify for significant good health discounts offered by insurers when they are in their 50s than if they waited to purchase coverage until they’re in their 60s.

In 2007, the average purchase age for individual coverage was 58, down from an average age of 67 as recently as 2000, according to AALTCI.

“As more individuals become aware of and understand the importance of planning for long term care needs, the number of individuals and families deriving benefit from this coverage will only increase,” Slome predicts.