Price of Representative Long-Term Care Insurance Policy Jumped 20 Percent, Association Says

A 55-year-old single individual can expect to pay $2,065 annually for $162,000 in current long-term care insurance benefits, according to the 2013 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group.  The Association noted that identical coverage cost $1,720 annually in 2012, meaning that the annual premium has increased 20 percent in one year.

"Persistent low interest rates and yields on fixed income investments continue to push costs for various insurance products higher,” Jesse Slome, the Association’s executive director, explained in a press release.

Slome told ElderLawAnswers that comparable coverage for a couple who are both age 60 would cost $3,725 a year.  The Association notes that $162,000 of coverage for each person will grow to roughly $330,000 of coverage each at age 80.

However, rates vary significantly from insurer to insurer for virtually identical policy benefits.   The Association analyzed costs for 12 leading insurers for single individuals and couples between ages 55 and 65.  

“For a 55-year-old single policy applicant the highest priced policy cost 87 percent more than the comparable lowest priced policy,” Slome said.  "For a couple both age 60, there was a 92 percent difference and no single insurance company always had the lowest price."

For the first time, the Association's Price Index examined rates from insurers offering a Future Purchase Option (FPO) that allows the applicant to lock in their health insurability and add to their coverage periodically.  This type of policy costs about five percent more and not all insurers offer it.

The complete 2013 Price Index will be published in the Association's 2013 Long-Term Care Insurance Sourcebook.  For more information, visit the American Association for Long-Term Care Insurance's Web site at www.aaltci.org or call (818) 597-3227.  (Download the Association's press release here.)

In other news, the Association recently reported that long-term care insurers paid $6.6 billion in benefits last year to individuals needing long-term care.  Female policyholders accounted for roughly two-thirds of all long-term care insurance claims and benefit dollars paid by the industry.  Meanwhile, care received in the home makes up half of all newly opened individual insurance claims.  

"People associate long-term care with nursing home care but insurance actually enables many people to remain at home when care is needed," Slome said.