Amount Consumers Pay for Long Term Care Can Vary by 40% says Report

The amount consumers pay for long term care insurance can vary by as much as 40% or more according to a report from the American Association for Long-Term Care Insurance.

A couple in their mid-50s purchasing long-term care insurance protection can expect to pay $2,350-per-year for about $338,000 of current benefits.  Their protection grows to about $800,000 of combined coverage when both spouses turn age 80.  A single individual will pay less.

According to the Association’s report, the vast majority of buyers for long-term care insurance are married couples where either both or just one spouse gets coverage.   If the 55-year-old couple did not qualify for preferred health discounts, their yearly cost would increase by $325 annually.

Advertisement

“This year’s survey included additional scenarios for both couples and individuals at varying ages, health conditions and to take into account the significant spread in costs among insurers for virtually identical coverage,” explains Jesse Slome, executive director of the Los Angeles-based long-term care insurance industry trade organization.

The study found that rates for comparable coverage from leading insurers could vary by between 41-to-48 percent.  “This makes it especially important for consumers to compare rates from four to six leading insurers,” Slome adds.  The Association has some 3,500 members nationally who offer this protection and represent leading insurers which include Genworth, John Hancock, Mutual of Omaha, Transamerica, MedAmerica and LifeSecure.

According to Association data the average age for individual purchasers is 57, with some 76.3 percent of purchases made between ages 45 and 64.  The 2011 Price Index analyzed costs for couples at ages 55, 60 and 65.

Advertisement

The study reported rates for individuals who qualify for good-health discounts as well as those who qualify for standard rates as a result of having one or more health issues.  In addition, for the first time, the analysis included a three percent compound inflation growth factor versus the five percent formula that has been used in prior studies.

“More purchasers are opting for this formula which significantly reduces the cost of coverage and can be quite adequate in terms of future benefits,” Slome explains.  The Price Index also looked at rates for policies including the newer Shared Care option whereby two policyholders can each access a combined pool of benefits.

Recommended SHN+ Exclusives