Rates for LTCI have gone up 2 percent since 2008, according to the LTCI price index, published by the American Association for Long-Term Care Insurance. Depending upon age, however, an insured may actually pay less this year. A base level of LTCI protection for a 55-year-old costs $723 per year (if married) or $1,060 (if single).
The annually-published index looks at LTCI policies carried by the largest companies and which offer approximately $115,000 in benefits, with subsequent increases. “A solid base plan of protection will grow in value to over $305,000 of protection 20 years from now,” said Jesse Slome, AALTCI executive director.
Slome notes that premiums can vary widely among age groups. The study found that costs can differ by as much as 100 percent. “This could reflect different benefits or simply the individual insurer’s pricing assumptions,” Slome explained. “Consumers should compare policies or work with a knowledgeable insurance professional.”
Historically, approximately half of all payouts on LTCI claims have been funded through income earned on companies’ investments. The balance of payouts has come from premium income. Due to declining interest rates in recent years, LTCI companies have been forced to raise premiums to make up for the loss in investment income. Last year, the LTCI industry paid $5.8 billion in claims.
“The cost of long term care insurance is directly related to how much protection you purchase, the age you first apply and your health at the time of application,” explained Slome. He adds that one third of applicants purchase a daily benefit of between $100 and $149. Most companies offer discounts for spousal coverage.