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Largest Long-Term Care Claim Nears $2 Million

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Long-term care (LTC) insurance costs are on the rise, as can be seen by a recently released Genworth Insurance study. Now specifics are available on just how much some of those claims are worth to the insured and how many people rely on LTC coverage.

A new study from the American Association for Long-Term Care Insurance (AALTCI) shows that the largest LTC claim currently open has hit $1.7 million in paid benefits. The policyholder bought her coverage at age 43 and was paying premiums of $881 per year until, three years after purchase, she filed her claim. Nearly fifteen years later, that policy is still paying benefits, and has already covered claims to the tune of $1.7 million. Premiums, it should be noted, stop when an individual begins to collect benefits.

Jesse Slome, executive director of AALTCI, said that such claims can last for years and rack up substantial balances. “Insurers paid some $6.6 billion in benefits to roughly 200,000 individuals last year,” he said in a statement, adding that just over 8 million Americans currently have LTC coverage of some kind in effect.

The second-largest claim still active (as of December 31, 2011), according to AALTCI, is that of a man who also began collecting on his policy after three years. He was paying premiums of $3,374 per year for those three years, but in the more than six years his policy has been paying benefits, it has paid out $1.2 million.

Slome said, “Long-term care insurance is not the lottery. A policy holder who paid $3,000 in premiums and received benefits exceeding $1.5 million is not a winner.” He added, “But having this protection in place can certainly pay off, and for thousands of Americans it increasingly is.”

Women, who have longer life expectancies than men and are more likely to need care during their lifetimes, make up two-thirds of the claimants of LTC policies. Of the seven largest open claims, AALTCI data show that only two of them are paid on behalf of male beneficiaries; the other five are women, and those five claims thus far have reached a collective total of $3,952,980.


Check out the Top 10 Cheapest States for Long-Term Care Costs at AdvisorOne.