Building an LTCI Policy You Can Afford

With the recent upheaval in the LTCI industry (see previous posts on the subject), being prepared for the possibility of long term care may seem out of reach. An uncertain market, premium increases coupled with reduced benefits, and insurance companies withdrawing from the market make it feel like long term care insurance may be an unwise purchase right now.

The Alzheimer’s Association reports that 1 in 8 older Americans have Alzheimer’s, and this is only one of the diseases that could end up requiring some degree of long term care. So how do you prepare? Are policies unaffordable, or even worth the expense? Experts in the field assure us that LTCI is still a very smart decision given the expense of long term care and the number people that will end up needing it at some point in their lives.

Shop Around

There are several things you can do to save on a policy, but the most valuable piece of advice out there is shop around.  LTCI is a relatively new industry and companies are still shifting their policies and rates to find the right balance for their profit margin. Each insurer has its own criteria and charges for various circumstances, so don’t assume that something too expensive at company A will be out of reach at companies B, C, and D also. Take the example of one 65 year old couple who found very similar policies at different agencies varying from about $3800 annually to over $7000. There are several factors in a policy that can end up making a big difference in your final cost so don’t give up after the first quote.

Across insurance companies, the two biggest factors in the cost of a policy are health and age. This is why it is highly recommended that you buy your LTCI policy now – you aren’t going to get younger or healthier by waiting a few years. If you are in good health, your policy could be 10-20% cheaper and once you lock in the “healthy” premium, it shouldn’t go up if you are diagnosed with anything later. Be aware, however, the question of your status as “healthy” may vary from one company to the next. Each has its own list of conditions that will give you that treasured price break, so ask around.

There are a few choices you can make in a policy that will impact the rate. In our next post we will discuss a few factors you can manipulate to balance your rate with the care you want to be prepared for in the future.

About the author

Amanda Dean

Amanda Dean is an expert in senior care with almost two decades of experience. After graduating from Cornell University with a degree in Human Development, Amanda was selected for the highly coveted role at NYU Langone Medical Center as a Geriatric Case Manager. She then founded and ran the largest independent local senior care advisory in NY for 12. Amanda joined Silver Living as the Senior Editor in 2012.