Long term care insurance is not as expensive
as many people think. Many options can be customized to fit your
specific needs and budget. The actual cost of your coverage will
depend on a number of factors including:
Your age when you apply
Your health
The length of time during which covered benefits would be
available
Specific policy features and benefits you select
Any discounts you are eligible for
Many people have found effective ways to pay the insurance premium,
including:
Interest from general savings
Dividends
Annuity income
The old saying, "you get what you pay for", applies here.
Long-term care insurance is the one insurance product that you do
not necessarily want to get the best price on. Most major, reputable
carriers price their products in the same ballpark. If you find
a carrier charging considerably less, that should cause you some
concern as to future premium stability.
An Example of the Cost Of Waiting:
Many people think that they will save money spent on premiums if
they just wait to buy long-term care insurance. This is absolutely
untrue. The longer you wait, the more you will pay in premiums over
your lifetime.
Each year you wait:
Increases the annual cost of the insurance because you have
to buy a higher daily benefit due to the fact that the cost of long-term
care has gone up.
You are a year older so your premium will increase.
You are at risk in the event you have a health change and
cannot qualify for coverage.
Example:
The following example uses a long-term care insurance policy that
includes $150 daily benefit, four-year benefit period, 90-day elimination
period, and inflation protection with a major carrier.
Bob, 50 years old, purchased insurance, the annual premium would
be $1,338.75. If he paid this premium until he was 85 years old,
he would have paid in a total of $46,856.25 in premiums.
If he waited just five years to purchase the same policy the annual
premium would be $1,974.37. The increased premium takes into account
that Bob is now five years older and he has to purchase a higher
daily benefit since the cost of care has increased. If he paid until
he was 85 years old he would have paid in a total of $59,231.10.
Waiting five years cost Bob an extra $12,374.85 in premiums over
his lifetime… it did not save him a single penny! In fact,
he was also uninsured for five years.
Insurance companies can increase premiums if the increase
affects an entire class of policyholder.
Some companies raise premiums more than others and this information
is not readily available. Check with your state insurance department
to find out about the premium-rate increase histories of both the
company and the specific policy you are considering.
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