• Do You Really Need Long-Term Care Insurance?
• Does Your State Have A Long Term Care Insurance Partnership Program?
• Buying Long-Term Care Insurance: What Is the Best Age to Purchase?
• Your Long-Term Care Insurance Plan: How to Find an Affordable Policy without Sacrificing Coverage
• Top 8 Facts About Long-Term Care Insurance in 2009
• How Long Will You Have To Pay Long-Term Care Insurance Premiums?
• The Underwriting Process: How the Price of your LTCI Premiums are Determined
• Long-Term Care Insurance: The Application & Underwriting Processes
• Why You Could Be Declined For Long-Term Care Insurance
• The Advantages of Long-Term Care Insurance for Couples
• No Long-Term Care Insurance? Read This!
• LTCI: Does Automatic Inflation Protection Guarantee Against Rate Hikes?
• A Sneaky Secret About Long-Term Care Insurance Premiums
• How to Identify a Partnership-Qualified Long-Term Care Insurance Policy
• State Long-Term Care Partnership Programs: An Overview
• The Most Common & Expensive Long-Term Care Insurance Mistake
• Preserve Your Long-Term Care Coverage with Inflation Protection
• Long Term Care Insurance: How to Choose the Best Elimination Period
• Do You Really Need All Those Long-Term Care Insurance Options?
• Are Tax-Qualified LTCI Policies Consumer Friendly?
• Choosing the Long-term Care Insurance Company That’s Right for You
• Tax Benefits for Long-term Care Insurance: What You Qualify For
• How Do You Select A Daily Benefit For Long-term Care Insurance?
• Which is Better: Individual Long-Term Care Insurance or Group Plans?
• Preparing for the High Cost of Long-Term Care
• When Should You Consider Buying Long-Term Care Insurance?
• The Facts: What Medicaid Pays for Long-term Care

COMMENTS
3 Responses to “The Most Common & Expensive Long-Term Care Insurance Mistake”

1. Sandee Says:
   

   You failed to mention that LTC is horribly expensive 'except' for the wealthy. When it first come around I was 58, had a full time corporate job and it would cost me $900 a month + which was totally unaffordable and is now well over $1.000. I am not wealthy, your comments do not apply to most of the American population who are struggling with the basics of food, gas, and health insurance. Long Term Care is a rip off from insurance companies and I wish someone would address that, versus trying to get everyone to pay those ungodly premiums.

   Alzheimer wards - cost $5,000 per month plus and that does not cover meds, diapers, etc. Yes, long term is costly in the end but I am really tired of the insurance "make a buck" theology.

2. Duane Lipham, CLTC Says:
   

   Sandee, I do agree that LTCI is not for everyone and that affordability is a major component of a sound LTCI plan.

   However, the figures that you used for your own coverage are way outside the norm. According to the 2007 Price Index published by the American Association for Long-Term Care Insurance, "A 55-year-old individual considering long-term care insurance protection can expect to pay $665-per-year if they are married or $1,075 if they are single. A 65-year-old purchasing comparable coverage will pay $1,292 (married) or $1,923(single)". My experience agrees with these figures.

   The point of my article is to emphasize that the insurance gets much more expensive the longer you wait to get it. Here are some further points made by the Price Index that illustrate this:

   "Our studies show that more applicants in their 50s qualify for preferred health discounts than those who wait until their 60s to apply (44 % versus 32% 2)," Slome notes. Using the Association's example, an individual age 55 considering a policy that currently provides $150-per-day benefit might expect to pay $1,027 (assumes they qualify for spousal and preferred health discounts). If they wait 10 years, until age 65, to buy the same $150-per-day coverage but no longer qualified for the good health savings, they would pay $1,939 yearly. "That assumes insurance prices don't increase over the decade they waited," Slome adds, "and most likely they will."

   "But, 10 years from now you will actually need to buy a higher benefit amount to keep pace with inflation," Slome states. In 10 years, at five percent annual growth, one will need to buy a $240 daily to be equal with today's $150-per-day benefit. The Association's 2007 Price Index reveals the average cost for $240-per-day benefit will range from $3272 to $4,823. "It's never an economic advantage to wait," Slome says. "And, more important, a change in your health could make it impossible to health-qualify no matter how much you are willing to pay."

   As far as the cost effectiveness of LTCI is concerned, if we assume that a 55 year old in good health purchases a LTCI policy using the above-mentioned average annual premium of $1027, in 10 years their cost would be $10,270. Since these policies also include inflation protection, in 10 years the daily benefit would be over $200 a day(at 5% annual compounding), bringing the total pool of benefits for a 3 year policy (1095 days) to more than $219,000. Anyway you look at it, LTCI is a bargain if you pay out a little over $10,000 and get over $200,000 worth of benefits.

   LTCI is not cheap for one simple reason - the cost of care is very expensive. However, LTCI premiums are affordable for a large portion of the population who have assets that they wish to protect or who want to maintain control over their own care and not burden their children or relatives with the cost of care.

   I hope this helps put the cost of LTCI in more perspective.

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