The short answer is, the day before you need to use it. Here’s a longer one.
Insurance is a bit like gambling. You won’t really know whether it has paid off until after you’ve made your bet. Like many decisions, determining when or at what age to get long term care insurance – for yourself or for your parents – is not an exact science. But there are some commonly offered guidelines you can consider when pre-planning.
Long term care insurance (LTC or LTCI*) provides financial support for general health care for an extended time, mostly (but not always) at home, over several years near the end of a person’s life or after a catastrophic illness or injury. It pays for care usually not covered by traditional health care insurance or Medicare. It is an increasingly popular option for people concerned about out living their retirement fund, as well as for their aging parents.
As much as 70% of people 65 or older will eventually need long term care, which can cost $4,500 to $10,000 a month. Unless you’re fairly wealthy, that can wipe out your retirement savings pretty quickly. LTCI is designed to protect you against that possibility.
The biggest factors to consider in deciding when to get long term care insurance are age, health, and wealth.
The younger and healthier you are, two things result: you are more likely to qualify for LTCI coverage, and your premiums are going to be lower. On the other hand, you’re less likely to need the coverage as soon. Many people use the milestone of 50th or 55th birthday as a guideline that’s as good as any arbitrary numbers can be; others choose to put their policies in place 10 to 15 years sooner, unwilling to risk not being covered should they need LTC earlier than they would have hoped.
Age also carries a risk of not qualifying for coverage. According to the American Association of Long-Term Care Insurance, 10-15% of applicants under the age of 50 are turned down. This extends to about 25% for people in their 60s, and to 45% for those in their 70s.
Fair or not, pre-existing conditions can be cause for denial of coverage. People already diagnosed with Alzheimer’s or Parkinson’s, for instance, will not qualify for LTCI. It’s a harsh reality that insurance providers are in business to make a profit. If insurance carriers accepted people currently diagnosed with chronic illnesses, the cost of the coverage would be far too high for all. Just like you can’t buy homeowners insurance on a house already on fire, paying for coverage when you or your parents are perfectly healthy, is the smarter choice in the long run.
This may be an obvious point, but every day you put off getting long term care coverage, you are not covered. Should an accident or unexpected health crisis occur, you will not have help paying for long term care. Crossing your fingers is fun when you’re buying a lottery ticket – not so much when you’re talking about your quality of life versus your pocketbook. Which would be worse: paying for insurance “too soon,” or suddenly finding yourself or your parents uninsured when long term care is required?
If you or your parents have plenty of money, LTCI may not be an expense you need to take on. People with very little income or savings may qualify for Medicaid. But for most people in the middle – without large savings or the ability to qualify for aid – LTCI is an option well worth considering, as a safety net.
If you or your parents are in your 50s, it may be time to start looking into long term care insurance. For an estimate of what a policy might cost based on your current parameters, click here.
LTC Consumer is a new, 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.
*We will use LTC to refer to the delivery of long term health care itself, and LTCI to refer to insurance plans designed to pay for that health care.