The statistics on long term care tell the story. Over age 65, almost 70% of people will need some form of long-term care.
The experiences of family and friends tell even more poignant stories about long-term care - the emotional roller coaster and the cost of paying for long-term care - at home or in a facility can add stress and strain to an already difficult time for which few of us are prepared.
Long-term care insurance is one way to mitigate some of the risk of long-term care costs that can easily reach $80,000 or more per year. Yet, I've heard many people say out of hand - I just can't afford it. That response is often based on myth rather than fact. So what do people really pay for long term care insurance?
New research from the American Association for Long-term Care Insurance (AALTCI) helps consumers put the costs in perspective. Over a third of recent buyers of long-term care insurance paid less than $1499-per-year, according to the report.
AALTCI 2010 Report: What People Pay For Long-Term Care Insurance
Premium Amount Under Age 61 Age 61-75 Age 76 And Older
Less than $500 2.0% 0.2% 0.9%
$500 - $999 26.1% 9.5% 9.8%
$1,000 - $1,499 15.4% 11.3% 11.4%
$1,500 - $2,499 24.1% 31.6% 19.5%
$2,500 - $3,499 11.8% 20.7% 24.0%
$3,500 - $3,999 3.3% 6.4% 6.8%
$4000 and Over 6.0% 14.9% 28.2%
Source: American Association for Long-Term Care Insurance analysis of data based on individual Partnership policy sales, June 2010
Of course, averages are just that and none of us are average. So you really need to speak with someone who understands long-term care insurance and can help guide you through selections on how much of the risk you want to cover and how much your health and family health history play in what you think the future need for long-term care might be.
An increasing number of people are purchasing coverage for part of the potential risk. For example, if the daily cost of care in your state averages $200, you choose to purchase a policy for $100 per day recognizing you'll cover the rest of the cost of care out of your savings.
People are also purchasing shorter term policies, for example almost 30% of people purchasing individual policies in 2009 chose a benefit period of 3 years.
Below are three tips from AALTCI for saving money when you purchase long-term care insurance
1. Leverage Your Good Health: Insurers will require you meet certain health qualifications to obtain coverage. Discounts are provided to those in good health and 62 percent of applicants between ages 40-49 qualified in 2009. The percentage drops to 46% for ages 50-59 and only 38% for ages 60-69. Once obtained, the preferred health discount is not lost when your health changes.
2. Right-Size Your Coverage: Some long-term care insurance is always better than none. Factor in other sources of income such as Social Security, pension and 401k plans that can pay costs and allow you to add money-saving options such as a 90-day deductible (Elimination Period) or consider a limited-pay plan with a Shared Care option that allows two spouses to share a common benefit pool.
3. Compare Coverage: Each insurer establishes its own rates, health standards and available discounts. As a result, virtually equal protection from two highly-rated insurers can vary by between 30 and 80 percent. Ask your insurance professional if they have access to policies from just one or from multiple insurers.
When you look at long-term care insurance, remember there is no one "right" plan. It depends on your individual circumstances and resources. Yet, looking at what others are purchasing can help provide some perspective. And always compare prices and benefits at two or three diffferent companies.