What Is the Best Age to Buy Long-Term Care Insurance?
You’re active and fit. It’s hard to imagine you might someday need help to bathe, dress, take medications, shop for groceries or even use the bathroom.
Unfortunately, people turning age 65 have nearly a 70-percent chance of needing some kind of long-term care in their remaining years, says the Administration for Community Living, an agency of the U.S. Department of Health and Human Services.
Long-term care insurance helps pay for the personal care and daily living assistance you may need down the road, as well as for care of a chronic medical condition or disability. It pays for care provided at home, in the community (such as an adult day-health-care program), and at assisted living and nursing facilities.
Why you need to plan early for long-term care
The sooner you address your long-term care needs, the more you have to gain, say experts. “Today, the chances of living a long life are greater than ever, and if you live a long life into your 80s, 90s and beyond, the likelihood of needing services that are categorized as long-term care increases exponentially,” said Jesse Slome in 2019. Slome is executive director of the American Association for Long-Term Care Insurance (AALTCI).
Many people underestimate the cost of the long-term care they’ll eventually need. Like all health care expenses, it is rising. According to a 2018 study conducted for Mutual of Omaha:
- Help from a home health aide costs nearly $26/hour on average.
- A private room in a nursing home costs more than $273 a day — or almost $100,000 a year.
Most insurance policies — including private health care, Medicare, Medigap and disability income — do not pay for caregivers to help with personal and daily living activities, even though this type of care accounts for most long-term care services and allows many people to stay in their homes as they age.
You’re more likely to qualify for coverage when you’re young and healthy
The ideal time to plan for long-term care is in your 40s to mid-50s. If you’re young and in good health, you’re more likely to qualify for coverage and you can lock in your insurability.
As you get older, by comparison, visits to the doctor’s office may result in new diagnoses and prescriptions that can either cause you to pay more for long-term care insurance or make you completely uninsurable, says Slome.
Coverage can be denied for a host of reasons: You use a multi-pronged cane or oxygen or need help with transportation; you’ve had metastatic cancer or a recent stroke; or you have memory loss, hepatitis or multiple sclerosis. The list of uninsurable conditions varies from one insurer to another, but the older you get, the more likely you’ll be checking one of those boxes.
In fact, 44 percent of applicants age 70 to 79 were denied coverage for long-term care insurance in 2017, compared to only 20 percent of applicants younger than 50 years, according to an AALTCI study.
The goal is to buy long-term care insurance before you develop a preexisting medical condition. Then the policy will help cover the cost of long-term care should you develop that condition later on.
You could pay less over the long term
The amount you pay for long-term care insurance depends on many factors. Age is a big one. The younger you are when you buy a policy, the less expensive the premium. With every year you wait, the cost increases.
Buying early also gives you more time to grow the overall value of the policy with an inflation protection rider, which can help you meet the rising costs of future medical care.
On average, a 55-year-old woman paid $2,700 in 2019 for a policy providing $164,000 in benefits at age 55 and $386,500 in benefits at age 85, according to an AALTCI report.
A 60-year-old woman paid $3,050 for benefits equaling $164,000, but at 85 years of age that policy was valued lower, at $343,000. (Most new long-term care insurance claims are made after 85 years of age, says the association.)
You’ll have less to stress over
People who have cared for aging loved ones know that it can be not only difficult but also the source of family disagreements. Long-term care insurance helps alleviate some of this anxiety.
“It just goes a long way to defray not only financial but also familial stress and arguments among family members,” says Tyler Qualio, president of the financial planning firm Sentinus in Oak Brook, Illinois. It gives people more options for care and takes some of the fiscal responsibilities off of the family.
Qualio generally brings up the subject of long-term care insurance when his clients turn 50 as a way to help protect their assets. He’s even had some successful clients in their 30s and 40s take out policies on their parents. “They’re hedging their bets,” he says, since responsibility for their parents’ care may ultimately fall to them.
Before signing on the dotted line, research reputable, well-established companies and investigate how much your long-term care insurance premiums might increase in the years ahead.