Wednesday, February 25, 2009

Reserach Reveals Consumers Purchasing More Affordable Long-Term care Insurance

Some 400,000 individuals purchased long-term care insurance protection in 2008 according to a just-released report. The overwhelming majority (84%) of individual buyers in 2008 were younger than age 65 and three-fourths (76%) selected a more affordable approach to this protection by opting for coverage for a specific number of years.

The annual study conducted by the American Association for Long-Term Care Insurance, the industry's professional trade organization, analyzed data on 215,000 buyers of individual long-term care insurance protection. According to the organization's research, some 8.2 million Americans now have long-term care insurance protection purchased on an individual basis (typically through an insurance professional) or through a plan offered by their employer.

"Individuals continue to purchase protection at younger ages," explains Jesse Slome, the Association's Executive Director. In 2008, some 53% of individual buyers were between ages 55 and 64; compared to 50% the prior year. Another 24% were between ages 45 and 54 (2008). "The age of buyers keeps dropping as consumers -- especially baby boomers -- understand the cost-saving benefits of locking in good health discounts and ways to make protection more affordable," Slome explains. In 2000, the average age of an individual buying long-term care insurance was 67.

The number of individuals purchasing long-term care insurance protection for a specified number of years also increased according to the Association study. Just over three-fourths (76%) of buyers in 2008 opted for coverage for a claim lasting five years or less; a slight increase over the prior year (71%). "The most expensive long-term care insurance policy is one with an unlimited benefit period (one with no cap on the number of years benefits will be received)," Slome explains. "Consumers are right-sizing their protection taking into account available savings and retirement income. This cost-sharing approach can reduce the cost of protection by 30 percent or more."

Perhaps in recognition of cost-consciousness, consumers were fairly evenly spread in terms of the level of selected daily benefit. Just under one-third (31.5%) opted for a daily benefit between $100 and $149. "In current dollars, that amounts to between $36,500 and $54,385 in a yearly benefit," Slome notes. "But most policies offer an option so benefits keep pace with rising costs and 15 years from now, the value of the (higher) benefit would be $75,800 a year."

The complete findings of the study are published in the 2009 LTCi Sourcebook available from the American Association for Long-Term Care Insurance. For additional information, call the Association's offices at (818) 597-3227 or visit the organization's website:

Summarized Study Data

Age of Buyers (2008)

Under 45 7%
45 to 54 24%
55 to 64 53%
65 and Over 16%

Daily Benefit (2008)
Less than $100 6.5%
$100 to $149 31.5%
$150 to $199 35.0%
$200 and Over 27.0%

Benefit Period (2008)
2 Years 7%
3 Years 30%
5 Years 24%
Unlimited 13%

Premium Paid (2008)
Age Low High Average
35 - 44 $637 $2,830 $1,650
45 - 54 $1008 $6,440 $1,900
55 - 64 $844 $7,400 $2,150
65+ $1,883 N/A $3,350

Additional information can be found in the Association's Consumer Information Center.

1 comment:

  1. Speaking of long term care and how to do financial analysis, I would add. Yes, Making the financial side calculations are critical to the decision process.

    BUT so is the back ground research on the types of policies and offerings from the various companies...without getting a 'pitch' or a 'powerpoint' tossed in before some objective review can take place. I suggest any prospective buyer of long term care insurance find some independent sources of info. The top 30 most popular policies all may look alike but there are differences. The Senior Health Advocate just published an ebook, which anyone can get for free that outlines these Top 30 Most Popular Long Term Care Insurance Policies for the top ltci companies. Your reader can read about the company they are condsidering or down load the book at this site: (this link may work


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