Tag Archives: Consumers

Obtain Long-Term Care Insurance While Young for the Best Rates

Obtain Long-Term Care Insurance While Young for the Best Rates

An American Association for Long-Term Care Insurance study of all 2005 long-term care insurance applicants revealed that 42 to 58 percent of all applicants between the ages of 50 to 59 qualified for good health discounts. Additionally, the percentage who qualify for good health discounts decreases somewhat for applicants in their 60s, but drops dramatically for applicants in their 70s.

Consumers who are in good health typically qualify for discounts that can decrease the cost of long-term care insurance by 10 to 20 percent each year. This means that a couple can save hundreds of dollars annually for the protection they need.

The researchers exemplified their findings by breaking down the total number of applicants into percentages who qualified for good health discounts by age range:

·   Under Age 30 – 66.5%

·   Between 30 to 39 – 61.0%

·   Between 40 to 49 – 53.7%

·   Between 50 to 59 – 44.2%

·   Between 60 to 69 – 31.9%

·   Between 70 to 79 – 18.8%

·   80 and Over – 11.2%

Eight leading long-term care insurers that represent approximately 80 percent of all individual policies sold in the U.S provided the study data. The researchers concluded from examining the statistics that consumers understand they will need long-term care at some point in their life. However, they often wait too long to plan for that eventuality. This failure to plan causes them to purchase long-term care insurance late in life and they end up paying a much higher premium as a result. The researchers went on to note that consumers don’t realize changes in their health can result in higher premiums for long-term care insurance, or make them ineligible for coverage at all.

There were two other important conclusions drawn from the study. First, consumers should begin investigating long-term care insurance options while they are still in good health, which for most people is in their 50s. The second is that consumers with less than perfect health should seek advice from a long-term care specialist who knows which health conditions various insurers will accept. Once a consumer has been declined by one insurer, they may find it impossible to obtain coverage from any insurer.

Study Shows Shorter Duration Long-Term Care Policies Are Adequate to Meet Most People’s Needs

When asked why they haven’t purchased long-term care insurance, most people answer that the coverage is simply too expensive. However, that excuse may be eliminated thanks to a national study conducted by Milliman, a leading independent national long-term care insurance actuarial firm.

The researchers examined claims data from approximately 1.6 million policies currently in-force. Their goal was to determine what percentage of long-term care insurance claimants with shorter duration policies actually exhausted all of their policy benefits. What they discovered is that only 14.4 percent of closed long-term care insurance claims lasted longer than 24 months. The study further revealed that approximately 33.2 percent of open claims last longer than 24 months, only 5.6 percent of closed claims lasted longer than 36 months, and only 16.2 percent of open claims last longer than 36 months. The study concluded that for a three-year benefit period, only 8 out of every 100 claimants exhausted their benefits.

Of course, there are catastrophic situations where individuals may need long-term care for many years. However, according to the study’s findings, the majority of consumers can receive adequate long-term care insurance protection with a shorter-duration policy. This is an important discovery, especially for those who believe unlimited protection is too expensive. The researchers added that some protection is better than none at all, and a shorter-duration policy is clearly more affordable. A consumer can reduce the cost of long-term insurance protection by 35 to 40 percent by purchasing a three-year benefit versus an unlimited benefit.

In an April 2006 article entitled Six Steps To Buying A Long-Term Care Policy, which was published on www.kiplinger.com, the author Kimberly Lankford offers the following advice about choosing a long-term care insurance benefit period:

“Increasing your benefit period from three years to lifetime could double your annual premium, so you should weigh the odds that you’ll need long-lasting care versus the extra price you’ll pay for coverage. The average nursing home stay is less than three years, but those averages include people who are in a nursing home for just a few weeks after a hospital stay and others who are in the nursing home for a decade or more, says Driscoll. (Marilee Driscoll is the author of The Complete Idiot’s Guide to Long-Term Care Planning and is quoted throughout Lankford’s article.)

“And these statistics do not include the home health care, assisted-living facility care and informal (unpaid) care received elsewhere,” she says.

Most people opt for a three-year or five-year benefit period, but it may be worthwhile to pay extra for a longer benefit period if you have a family history of Alzheimer’s or some other chronic disease.

If you’re trying to save money, Driscoll recommends shortening the benefit period rather than extending the waiting period.”

Long-Term Care Planning: A Pre-Retirement Decision?

Long-Term Care Planning: A Pre-Retirement Decision?

In the past, new and soon-to-be retirees generally assumed that they could put off long-term care planning until their later years. However, a new study shows that people who purchase long-term care insurance (LTCI) before retirement may stand to benefit greatly.

The study, conducted by the American Association for Long-Term Care Insurance (AALTCI), reveals significant advantages to starting the long-term care planning process in your 50’s, or even earlier. The study was based on information collected from more than 250,000 consumers who purchased LTCI in 2007.

The AALTCI examined data from 10 leading insurers to determine the percentage of applicants who qualified for preferred health discounts on LTCI. The Association also looked at the percentage of applicants who did not qualify for insurance because of a pre-existing condition.

The Eye-Opening Statistics

Here are a few of the interesting statistics released from this enlightening study:

·   On average, 22.9% of applicants between the ages of 60 and 69 were declined coverage because of a pre-existing condition

·   42.2% of applicants between 70 and 79 were declined

·   69.8% of applicants over 80 were declined

·   On average, just 13.9% of applicants aged 50 to 59 were declined

·   51.5% of people between the ages of 50 and 59 who applied and were accepted for coverage qualified for preferred health discounts

·   66.8% of applicants between the ages of 40 and 49 qualified for the discount

These numbers clearly suggest that consumers may be better off if they apply for LTCI before retirement, when they are less likely to have a pre-existing medical condition.

Not only are younger applicants more likely to be accepted for coverage, but they also stand a better chance of receiving a valuable preferred health discount. These discounts can reduce the cost of long-term care insurance by 10% to 20% annually, which can amount to savings of hundreds of dollars a year for a couple. Additionally, these discounts last a lifetime. Once an applicant qualifies for a preferred health discount, the insurer cannot retract it should the applicant’s health change in the future.

Losing At the Waiting Game

Still, the vast majority of consumers wait until after retirement to apply for LTCI. According to the AALTCI, approximately 400,000 people obtained LTCI coverage in 2007, and 84% of them purchased a policy before the age of 65. However, based on this new study, consumers may want to consider purchasing a policy even sooner.

“Many people still wait too long to start the planning process only to discover they can’t get coverage no matter how much they are willing to pay,” Jesse Slome, Executive Director of AALTCI, said in an association press release. “Planning for long-term care is similar to retirement planning. There are significant advantages and reasons to start early. Your health when you apply is probably the most important.”

More Preferred Health Discounts All Around

The new AALTCI study also shows that, in general, more people qualified for preferred health discounts in 2007 as compared to 2005. This may be a sign that our nation’s population is a little healthier than it was just two years ago.

However, most LTCI applicants who received preferred health discounts were younger in age, according to the study. For example, 66.8% of applicants between 40 and 49 received discounts in 2007 as compared to 53.7% in 2005—a 13.1% increase.

Better Shop Around

However, the AALTCI points out that each insurer follows a different set of standards when it comes to deciding who qualifies for discounts and which applicants will be accepted or declined for coverage. Additionally, discounts and insurance rates vary greatly depending on your age, marital status and health. Therefore, if you’re considering buying LTCI, you should shop around before settling on an insurer.

“It pays to speak with a knowledgeable long-term care insurance professional who can offer coverage from more than one insurer,” Slome said in the AALTCI press release. “The difference in cost can be as much as 30 percent or more annually and since it rarely is advantageous to change policies, it pays to get the best coverage for the best price from the onset.”