If you are considering long-term care insurance, you'll have to make a number of critical decisions. What's the best age to apply? How much protection do you buy? What does coverage cost and how can you save?
You are not alone. While your decision should not be based on what others do, information is always helpful. With that in mind, here is some valuable information resulting from studies conducted by the national long-term care insurance trade organization.
Some 400,000 individuals purchased long-term care insurance protection in 2008 according to the study and the overwhelming majority (84%) of individual buyers in 2008 were younger than age 65. Three-fourths (76%) of those purchasing an individual policy (one sold by a long-term care insurance professional) selected a more affordable approach to this protection by opting for coverage for a specific number of years.
The annual study conducted analyzed data on 215,000 buyers of individual long-term care insurance protection. According to the organization's research, some 8.2 million Americans now have long-term care insurance protection purchased on an individual basis (typically through an insurance professional) or through a plan offered by their employer.
Individuals continue to purchase protection at younger ages. In 2008, some 53% of individual buyers were between ages 55 and 64; compared to 50% the prior year. Another 24% were between ages 45 and 54 (2008). The age of buyers keeps dropping as consumers -- especially baby boomers -- understand the cost-saving benefits of locking in good health discounts and ways to make protection more affordable. In 2000, the average age of an individual buying long-term care insurance was 67.
The number of individuals purchasing long-term care insurance protection for a specified number of years also increased according to the Association study. Just over three-fourths (76%) of buyers in 2008 opted for coverage for a claim lasting five years or less; a slight increase over the prior year (71%). The most expensive long-term care insurance policy is one with an unlimited benefit period (one with no cap on the number of years benefits will be received). Consumers are clearly right-sizing their protection taking into account available savings and retirement income. This cost-sharing approach can reduce the cost of protection by 30 percent or more.
Perhaps in recognition of cost-consciousness, consumers were fairly evenly spread in terms of the level of selected daily benefit. Just under one-third (31.5%) opted for a daily benefit between $100 and $149. In current dollars, that amounts to between $36,500 and $54,385 in a yearly benefit. But most policies offer an option so benefits keep pace with rising costs and 15 years from now, the value of the (higher) benefit would be $75,800 a year.
One of the most important ways consumers can save money is by comparison shopping. Costs for long-term care insurance can range significantly. The same basic coverage for an individual age 55 can cost as much as 50% more with certain insurers. For that reason, it is very important to speal with a professional who can access rates from several leading insurers.
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