When is the best time to buy long-term care insurance?

Many people start thinking about putting a long-term care insurance plan in place when they are IN or near retirement, but this can often be too late!

When applying for long-term care insurance, your health is super important. If you aren’t healthy enough, you will not qualify for it. Insurance companies establish their own health requirements and offer discounts to applicants who are in good health. Once you have coverage, the insurance company cannot take away your coverage if your health gets worse.

Premiums are based on many factors, but your health and age are big factors when you apply. The insurance company actually rewards you for buying a policy at a younger age, which means you get more insurance on each dollar.

Example

A couple wants to buy a traditional LTC insurance policy. They are age 50 and in Preferred health.

They're considering waiting 5 years to buy a policy and want to know the differences in benefits received with similar premiums paid.

Here's the breakdown:

Today                   Couple - age 50                  Couple - age 55

Monthly benefit-            $4,500/ea.                         $3,400/ea.

Total benefit-               $162,000/ea.                      $122,000/ea.

Benefit period-               3 years                                  3 years

Inflation-                  3% compound                       3% compound 

Shared care-                   Yes                                       Yes

Total premium-               $4,273                                $4,268 

  In 30 years         Couple - age 50                 Couple - age 55    

Monthly benefit-           $10,922/ea.                          $7,000/ea.

Total benefit-               $393,216/ea.                      $250,000/ea.

 Benefit period-               3 years                                  3 years    

Inflation-                  3% compound                       3% compound   

Shared care-                      Yes                                     Yes        

Total premium-                $4,273                                $4,268    

If they wait and buy at age 55 instead of age 50, their monthly benefit is $1,100 LESS per person in just the first year. In 30 years, it’s almost $4,000 LESS each month per person! Their initial total benefit amount is $40,000 LESS and in 30 years, it’s a whopping $143,000 LESS!

 There is no advantage to waiting to put a plan in place if you're healthy.

?Waiting not only decreases the amount of insurance you can get for the same dollar, but you aren’t guaranteed that you can even health qualify if you wait. One bad diagnosis or accident can disqualify you.

Also, some carriers have even recently changed their pricing on new policies. Policies issued in the future may have higher pricing than policies issued today.

So when is it a good time to put a long-term care insurance plan in place?

When you are healthy and younger!

I always start with a health pre-screen questionnaire with my clients. This allows me to accurately assess your health status and match you with the carrier you would best fit with before taking any applications.

I like to talk with my clients around age 50 because typically they’re still in fairly good health and we have more options when designing a plan. Although I’ve had clients that don’t qualify even in their late 40s because they’re very unhealthy and have a long list of medications and medical impairments. If you’re in your 60s or 70s, in pretty good health, and you haven’t put a plan in place yet, don’t worry, there may still be options for you too! It will be more expensive since you’re older, but you may still be able to put together a meaningful plan.

Gratefully,

Kelly