SOURCE: American Association for Long-Term Care Insurance
LOS ANGELES, CA--(Marketwire - Mar 7, 2013) - Newer options are enabling individuals in their 50s and 60s to obtain more affordable long term care insurance protection. A just-released report suggests ways current choices and comparison-shopping can save hundreds of dollars in yearly costs.
According to the 2013 National Long-Term Care Insurance Price Index released today by the American Association for Long-Term Care Insurance rates varied significantly for virtually identical policy benefits. "For a 55-year-old, coverage from one insurer costs 87 percent more than the lowest priced policy," notes Jesse Slome, the trade group's director. "For a couple both age 60, the difference was 92 percent and no single insurance company always had the lowest price."
In the report, Slome recommends a "Good, Better, Best Approach" to long term care insurance protection planning. "Today, newer more affordable options offer people greater choice to suit their needs and situation," Slome advises. "Some protection even without a costly inflation growth option can be better than no coverage at all and cuts yearly costs by 50 percent."
According to the Association's Price Index, the average "good policy approach" cost for a 60-year-old couple is $1,816 annually. "A good long-term care insurance plan should take into account the future availability of savings, Social Security benefits and investment retirement income to pay some costs of care," Slome explains. "Using our formula, each spouse has $162,000 of insurance benefits for their needs."
Currently, a number of insurers offer a Future Purchase Option that allows the applicant to increase their coverage periodically. "Our better approach selects a starting point for benefits that can be added to later where health underwriting issues won't get in the way," Slome says. "This approach adds about five percent to the cost but offers enormous value in terms of future flexibility." Not all insurers have this option currently and the Association found a 40 percent price differential between the lowest and highest priced policies with the future purchase feature.
Historically, AALTCI notes, most long-term care insurance policies purchased by individuals have added an inflation growth option. "Five percent was established as the norm in the 1990s when double-digit inflation was a recent memory but much has changed over 20 years," Slome explains. "Today, a three percent yearly increase in benefits is considered a best option for those willing to pay the higher cost." According to the 2013 Price Index, a couple both age 60 will pay $3,725 yearly for $162,000 initial coverage that grows three percent yearly to reach $329,000 at age 85.
The Association analysis found that costs from different long term care insurers varied by as much as 40-to-90 percent. "To get the best coverage for the least price, work with a knowledgeable professional appointed to sell policies from at least four or five of the leading insurance companies," Slome recommends.
To access free guides outlining ways to reduce long term care insurance costs or to connect with designated long term care insurance professionals for no-cost and no-obligation cost quotes call the organization at (818) 597-3227 or visit the Association's website at www.aaltci.org.