Long Term Care Insurance Grows More Difficult for Seniors to Fund
Financial PLanners and Elder Care Attorneys are recommending Reverse Mortgages (HECM) to help seniors have enough funds to retire or put the money in a line of credit and let grow until their client has medical needs.
Options for long-term care (LTC) insurance are diminishing in the marketplace, but a new industry-specific price index has revealed a substantial spread in costs for plans with similar coverage when compared with prior years.
According to a new report released by the American Association for Long-Term Care Insurance (AALTCI), a couple in the mid-50s age range purchasing new LTC insurance coverage can expect to pay around $3,000 for a potential benefit of over $770,000 in combined coverage, presuming they start requiring care when they reach age 85.
Specifically, the annual premium for a 55-year old couple averages out to $3,050. Comparatively, annual premiums for single men at the same age would be $2,050, while single women would pay $2,700.
In the report’s accompanying announcement, AALTCI director Jesse Slome explained, “Married couples often benefit from a significant spousal discount,” while also noting that the biggest consumers of LTC insurance are generally married couples or older adults who live together.
Slome also stated that the spread between the lowest and highest costs for virtually identical coverage – as high as 243 percent according to the index analysis for 55 year olds – was “the largest spread I can recall in recent years.” He added that it was generally a rare occurrence to, “see one policy costing more than twice another policy when both are large insurers but each company gets to set their own pricing and each has their own target market,” he said.
Accompanying the index for the first time are a series of planning and saving strategies to offer some ideas for how seniors can more efficiently fund the purchase of LTC insurance. Slome makes one recommendation in which a married couple looks into a shared care option, in which one spouse can use the benefit pool of the other.
He also adds that a couple could also consider “a two percent inflation growth option instead of the three percent,” which he says can save nearly 20 percent annually.