As the economic picture remained clouded and investors remained nervous, the age of purchasers of long-term care insurance in 2009 increased for the 55-and-older group over 2008, according to an annual study by the American Association for Long-Term Care Insurance (AALTCI) to be released in April. The organization’s research was based on an analysis of 155,000 individual-placed policies.
“Clearly the economy is having an impact on when individuals start their long-term care planning and what benefit levels and policy options they select,” said Jesse Slome, executive director of the industry organization, in the release announcing the findings.
According to the study, 73.5% of buyers of individual policies were age 55 or older when they applied for coverage in 2009, compared to 69% in 2008.
“The decline in value of retirement portfolios has actually prompted an increased number of advisors to recommend long-term care insurance to clients who previously thought they could self-insure the risk,” Slome said in an interview. “That may account for some of the growth of limited-duration policies among those who wanted to offset some, but not all, of the financial risk.”
When it came to choosing benefit options, the study found a slight increase in the percentage of individuals selecting lower benefit levels and longer elimination (deductible) periods, which both contribute to lower premium costs. About 43% of buyers selected initial daily benefit amounts of $149 or less; compared to 37.5% who chose that level of coverage in 2008. The average buyer between ages 45 and 54 paid $1,900 annually for coverage.
“The sweet spot for selling long-term care insurance appears to be the mid-50s,” Slome said. “That’s generally when protection can be most affordable and when applicants can still qualify.”