Chances are you are as tired reading the same old articles about long term care insurance as I am writing them. So, I have decided to reveal some little-known facts about long term care insurance planning that I have discovered over the past 20 years. Hope you find them new, refreshing and of value.
What They Never Tell Single Women
Women know they generally outlive men and as a result are far more likely to need long-term care. And, indeed each year women receive two thirds of all LTC insurance claim benefits paid by insurers.
But, here’s the fact rarely shared with women who are single, or as I prefer to call it, living alone: a single woman pays the same for long term care insurance as a single man.
Here’s a way of explaining the importance of this fact. If we were talking about car insurance, it would be equivalent to someone with four accidents and a DUI paying the same as the driver who only takes the car out on Sunday. For single women, the unisex pricing for long term care insurance makes this one of the few real planning bargains for women.
Why You Need To Start Planning Before Turning 65
There is no perfect age to start looking into long-term care insurance. But there’s a really good reason to start the process prior to age 65.
Every year, millions of Americans celebrate their 65th birthday. And, what’s the best present they get? Medicare qualification. That’s important because for the year (or so) leading up to that important milestone, these adults put off non-emergency doctor visits knowing they can wait until after getting that magic card.
But, long-term care insurance is only issued to those who can “medically qualify”. The diagnosis and prescription written by your doctor could make you ineligible for insurance coverage, no matter how much you’d be willing to pay. So, apply before the end of your 64th year, earlier if you can.
This Is Nursing Home Avoidance Insurance
The first long term care insurance policies were issued in the 1980s and originally all they paid for was skilled nursing home care. And it really is unfortunate that for so many years insurance companies have effectively associated this product with nursing home costs and nursing home stays.
Because the truth of the matter is that a primary benefit of long-term care insurance is that it pays for care at home or in an assisted living community. I refer to it as nursing home avoidance protection because having the available funds to remain in your own home is a primary reason people buy this protection.
And, just half (49%) of newly opened long term care insurance claims beginning in 2010 were for home care. A fourth (24%) were for assisted living and 27 percent were for skilled nursing home care.
Why Pay Double For The Same Benefit
I’m not as cute as Flo the television spokeswoman for Progressive insurance. But just as the pricing for car insurance varies from one insurer to another, so too does the pricing for long-term care insurance.
Every year the American Association for Long-Term Care Insurance compares prices from leading insurers for virtually identical coverage. According to our 2011 study, a couple age 55 could pay as little as $2,085 or as much as $3,970 annually for the same coverage. That’s almost double. The average cost was $2,350 for coverage worth $338,000 immediately and as much as $821,500 at age 85.
The difference is due to different actuarial assumptions and available discounts as well as different profit targets. But because once you buy long term care insurance, it almost never pays to switch companies and start over at your new attained age, this is one time when it really does pay to shop around and make sure the insurance professional you work with has done some comparing for you.
About the Author
Jesse Slome is executive director of the American Association for Long-Term Care Insurance. Click here to read two online guides with tips for reducing long term care insurance costs. No sign-in information is required. For more long term care insurance information visit the Association’s website.