One size does not fit all
Like all health insurance, many factors influence the price of premiums you may be offered for long term care insurance (LTCI). LTC Consumer summarizes some of the most common for you:
The younger you are, the less you pay. Consider this: The cost of a single man age 60 for an average policy is roughly $2,200 per year. That same policy only 5 years later increases 31% to $2,900 per year. The good news is once the policy is in place; it cannot increase simply due to an age change. Our average buyer’s age is 56 today and getting younger each year. We suggest buying LTCI before you hit 60.
Most carriers look back over the past 3-5 years of your medical history. The healthier you are, the lower your rates will be. A preferred health rating will save you 10% compared to the most common standard rating. But if you do not have good health the carriers can charge more; up to 25% or make a counter offer of fewer benefits. Pre-existing conditions like diabetes, history of stroke, depression, or a long-time tobacco habit and others can make you ineligible completely for the coverage. If you can, you want to secure coverage before your health changes. Just like an auto insurance company would never cover an accident after it happens, long term care carriers will not cover those who had a significant change in their health status.
Relationship Status and Gender
Couples get a break over singles by up to 30% if they both buy a policy. Why? Some of it is volume discounting. The insurance company is getting two policies instead of just one and the discount provides a financial incentive. Also most often your loved one will help provide care for you if you need it. When it comes to gender, in general terms, men do not live as long as women and women currently make up the majority of those on claim.
Deductible and Duration
You can significantly change the cost of the policy by adjusting the duration of your benefits. To maximize the benefit for your cost, consider a short 1-2 year policy with pretty high benefits. We call this short and rich. Considering most claims do not exceed 3 years, having a rich benefit for a couple years buys time for you to plan for an extended claim if needed. But if the concern is dementia or Alzheimers then you might want to consider a benefit of 5 years or more. An Alzheimers claim can easily last 6-10 years or longer.
Carrier and State
A 50-year old single woman could pay as little as $1,500 per year in one state with one carrier, and up to $3,000 per year for the identical coverage in another state with a different carrier. Compare averages in different states here. Your resident state governs your policy when you buy it, but after your policy is inforce you can move to any state and it will pay the same regardless.
Visit LTC Consumer’s Instant Quote tool to start exploring estimated costs for your specific factors.
LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.