According to a recent report by the American Association for Long-Term Care Insurance, there's a disconnect with what consumers actually pay for LTCI and what they "think" they will pay.
"The single greatest misconception held by consumers is the actual cost of coverage," says Jesse Slome, AALTCI's executive director. "Most people perceive the cost is actually quite a bit higher than the real amounts paid by large percentages of those purchasing coverage."
The data in this study is based on an analysis of more than 200,000 purchasers of partnership qualified LTCI policies, and this discrepancy or misunderstanding of the actual price leaves an opportunity for advisors to educate prospects and clients.
Taking a look inside the numbers: "One-fourth (27.8 percent) of individuals purchasing long-term care insurance during the first half of 2010 who were under age 61 pay less than $1,000 a year."
In addition, the survey reveals nearly one in five (19.4 percent) purchasers in the study who were under age 61 pay between $20 and $30 a week for new policies. More than one-fourth of buyers (28.9 percent) in this age band pay between $1,500 and $2,500 a year with the remainder paying more.
Less than one-tenth of these buyers (6.8 percent) pay $4,000 or over. Slome says: "Studies that report average premium costs regrettably mislead the public into the perception that long-term care insurance is expensive. Averages include large numbers of older buyers and other factors that result in higher costs. The fact is that many people pay far less than the average amounts reported."
According to the report, the average age for new individual purchasers is now 57 with eight out of 10 (80.5 percent) of new individual buyers in 2009 falling under age 65 when applying for long-term care insurance.
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