Buying LTC Insurance

People with certain conditions may not qualify for long-term care insurance. Since standards vary between different insurance companies, if one company denies you, it is possible that another company will accept you. Common reasons why you might not be able to buy long-term care insurance include:

• You currently use long-term care services.
• You already need help with Activities of Daily Living.
• You have AIDS or AIDS Related Complex (ARC).
• You have Alzheimer’s Disease or any form of dementia or cognitive dysfunction.
• You have a progressive neurological condition such as multiple sclerosis or Parkinson’s Disease.
• You had a stroke within the past year to two years or a history of strokes.
• You have metastatic cancer (cancer that has spread beyond its original site).

Insurance companies also consider other health conditions when determining your eligibility. If you buy your long-term care insurance before you develop one of the health conditions listed above, then your policy will cover the care you need for that condition.

On this page:

• Things to consider before buying long-term care insurance
• Where you can buy long-term care insurance?
• What does long-term care insurance cost?

Things to consider before buying long-term care insurance

Things to think about before you buy long-term care insurance:

• Don’t buy out of fear or emotion.
• Don’t buy more insurance than you think you may need. You may have enough income to pay a portion of your care costs and you may only need a small policy for the remainder. You also may have family members willing and able to supplement your care needs.
• Don’t buy too little insurance. That will only delay the use of your own assets or income to pay for care. Think about how you feel about having care costs that are not covered. While you can usually decrease your coverage, it is more difficult to increase coverage, especially if your health has declined.
• Look carefully at each policy. There is no “one-size-fits-all” policy.
• If you choose a policy that only pays for room and board in a facility, plan for other expenses, such as supplies, medications, linens, and other items and services that your policy may not cover.
• It costs less to buy coverage when you are younger. The average age of people buying long-term care insurance today is about 60. The average age of those purchasing policies offered at work is about 50.
• Make sure that you can afford the long-term care insurance policy.
• Research and consider different options and talk with a professional before finalizing your decision.

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Where you can buy long-term care insurance?

Insurance specialist
Most people buy long-term care insurance directly from an insurance agent, financial planner, or broker. States regulate which companies can sell long-term care insurance and the products that they can sell. There are more than 100 companies offering long-term care insurance nationally, but 15 to 20 insurers sell most policies. The best way to find out which insurance companies offer long-term care coverage in your state is to contact your state's Department of Insurance.

Employer
Many private and public employers, including the federal government and a growing number of state governments, offer group long-term care programs as a voluntary benefit. Employers do not typically contribute to the premium cost (as they do with health insurance), but they often negotiate a favorable group rate.

If you are currently employed, it may be easier to qualify for long-term care insurance through your employer than it is to purchase a policy on your own. Check with your benefit or pensions office to see if your employer offers long-term care insurance.

The U.S. Office of Personnel Management has additional information about the Federal Long Term Care Insurance Program. Check the map below to see if your state has a program to offer long-term care insurance to public employees, public retirees, and their families.

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What does long-term care insurance cost?

If you have a long-term care insurance policy, you pay a pre-set premium and the policy pays for the services you need when you need them (up to its coverage limits). On occasion, if the assumptions used to price the policy prove wrong, the insurance company can increase your premiums beyond the pre-set amount. Typically, you are not expected to pay premiums while you receive long-term care.

The cost of a long-term care policy varies greatly based on your age at the time of purchase, the policy type, and the coverage you select. In 2007, the average annual premium cost for individual buyers across all ages and policy types was about $2,207. Excluding the 20 percent of people who elected lifetime coverage, the average policy from 2007 covered 4.8 years worth of benefits with a daily benefit amount of $160. Most people selected a comprehensive policy that covers both facility and at-home care, and they also purchased some form of automatic inflation protection. The chart below shows the average annual long-term care insurance premium amounts for specific age groups in 2007.

Average Monthly Premiums by Age for all LTC Policies sold in 2008
Group market policies (includes FLTCIP)

Note: 8% of buyers in 2008 group market bought 5% compound IP (company-specific numbers range from 15% to 100%)

• Coverage & Benefits Choices
• Buying LTC Insurance
• State Partnership Programs

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