This question is an important one; What is the best age to buy Long-term Care insurance (LTCI)? According to the Department of State Health and Human Services, more than 70% of Americans over the age of 65 will need long-term care services at some point in their lives. With nursing homes costing over $80,000 a year on average and rising at a rate of 4% compounded annually, long-term care insurance can be a crucial part of protecting an estate. So to answer this question; Simply put, the best time to buy LTCI is the sooner, the better. There are two compelling reasons why you should look into long-term care while you are young and healthy:
Health: According to the 2012 study from the American Association of Long-Term Care Insurance, 17% of applicants ages 50 to 59 were declined for LTCI. The decline rate rose to 25% for applicants age 60 to 69 and a 45% for applicants ages 70 to 79. These numbers are expected to rise further when the 2013 study is published since companies are continuing to tighten underwriting. Let’s also consider the missing data here that includes applicants who never even submit an application because they or their agent know they won’t be approved.
Price: The way the pricing structure is set up, the earlier you purchase LTCI, the less you pay over time if all things are equal. Take for example a couple purchasing a policy that provides $200 per day, a three-year benefit period, with automatic inflation protection. Now let’s assume they pay premiums to age 85 and qualify for the best rate class possible. By purchasing the policy at age 50, they will save over $6,000 during their lifetime versus purchasing the same policy at age 55. If they were to wait until age 60 to purchase the coverage, they will pay in over $33,000 more during their lifetime. By waiting to age 65, that number jumps to over $68,000!
As you can see, there is absolutely no advantage to waiting if you are considering long-term care insurance. If you would like more information on the different plans available, please contact our office.