Reducing the cost of long term care insurance
While there are a multitude of discounts available for long term care insurance, one of the most important factors in keeping premiums down is purchasing a policy while you are young and healthy.
Since premiums are locked-in at the age of purchase, it is possible both to have the benefits of coverage at a younger age and to pay in less premium over your lifetime.
Besides the increased premium charged to older applicants is the higher daily benefit you would need to purchase in order to keep pace with the same inflating benefit you might have purchased at a younger age. In other words, a $100 benefit purchased at age 55 would have increased to $160 per day by age 65 (with a standard 5% compound inflation rider). Therefore, if you wait until age 65 you would need $160 as your starting point.
The following is an example of how purchasing a policy at an older age contributes to the "cost-of-waiting".1
|
Purchase Age
|
Annual Premium
|
Covered Years to Age 85
|
Total Premium Outlay
|
Care Days to Recover Premium
|
|
55
|
$ 750
|
30
|
$ 22,500
|
86
|
|
65
|
$ 2,016
|
20
|
$ 40,320
|
155
|
|
75
|
$ 8,073
|
10
|
$ 80,730
|
310
|
Compounding the higher premiums associated with older age, you may have a change in health which could reduce or eliminate any discounts for good health.
|
Percentage of Applicants Who Qualify For Good Health Discounts2
|
|
Under Age 30 - 66.5%
|
|
Between 30 to 39 - 61.0%
|
|
Between 40 to 49 - 53.7%
|
|
Between 50 to 59 - 44.2%
|
|
Between 60 to 69 - 31.9%
|
|
Between 70 to 79 - 18.8%
|
|
80 and Over - 11.2%
|
Other Discounts - Availability Varies by Carrier
-
Spousal, Married & Partner: 10-40% Discount
-
Residential / Same Household: 15%
-
Employer Sponsored: 5-10% Discount
-
Small Business: 5-10%
-
Multi-Product/Loyalty: 5% Discount
1. Policy benefits selected; Comprehensive coverage, $100 per day (adjusted for inflation at age 65 & 75), 3-year benefit period, 90-day elimination period 5% compound inflation, spousal discount, preferred health discount.
2. American Association for Long-Term Care Insurance