Too often, clients only seek long term care insurance once it is too late. The cost for the care they want, usually home health care, becomes prohibitive at this late stage. For most people, long term care insurance is an option worth considering earlier rather than later. 

But when is the ideal time to start looking into long term care insurance? 

We will break down the statistics and the facts so you can find the best age to start applying. 

If you are above this age, it does not mean that you will not be able to get long term care insurance within your budget. A broker like Cardinal will have many options for you, even if you have some preexisting conditions.

What age should I apply for long term care insurance? 

According to the American Association for Long-Term Care Insurance, in 2019, 76.4% of new long term care insurance buyers were between age 50 and 69. If we break that down,

  • 16.2% buy between age 50-54
  • 24.7% buy between age 55-59
  • 23.2% buy between age 60-64
  • 12.3% buy between age 65-69

 

Between age 50-59 is clearly the most popular time to apply for long term care insurance. For most, this is going to be because they are getting close to retirement but are still in good health and have a high chance of being accepted at a lower rate. 

What age do people get denied for long term care insurance? 

It is important to look at who is getting denied for long term care insurance as well. 

Denials increase slowly by age:

  • Age 49 and younger: 16% are denied 
  • Age 50-59: 21% are denied 
  • Age 60-64: 24% are denied 
  • Age 65-69: 32.5% are denied 
  • Age 70-74: 44% are denied 
  • Age 75+: 51.5% are denied 

Over half of the people applying for long term care insurance at or over age 75 are denied. This is largely due to the fact that older applicants have more serious health conditions. 

If you have a preexisting condition, it is going to be harder, but not impossible, to get approved for long term care insurance.

It is important to note that being denied from one long term care insurance company can negatively affect your chances at getting approved by another one.  Cardinal can help you explore your options, within your budget, so that you have the best chance at getting approved. 

What age do people start claiming long term care insurance benefits?

Most new claims for long term care start after age 85. To break this down,

  • Age 70-80: 30.3% of claims
  • Age 81-85: 25% of claims
  • Age 86-90: 27.2% of claims
  • Age 91+: 17.5% of claims

51.5%  of new insurance claims are for home health care. This number has grown significantly over the years as more and more people are choosing to stay at home. 

While staying at home is most people’s preferred option, it is also usually the most expensive option. If you want to stay at home, you need to have a plan. A plan not only for how you are going to pay for it, but also who you want to involve in the care: professionals, family members, friends, or a mix of all. 

What type of long term care insurance is being purchased?

16% of all new long term care policies purchased in 2019 were traditional long term care insurance. 84% of new policies were linked-benefit coverage.

Linked benefit coverage, usually referred to as hybrid long term care insurance, combines another insurance product with long term care insurance. These plans are becoming more and more attractive because you don’t “lose your money” if you don’t actually need home health care. 

Life insurance is a very common additional benefit with these linked benefits policies. This means if you don’t need long term care coverage or don’t use all your benefits, your heirs will get a payout at your death. 

These linked benefit policies also allow for more flexibility in how you use your benefit, especially in regards to home health care, making them more attractive. 

These policies are more complicated though, and you should really explore multiple products with a fiduciary before making a decision. 

How much does long term care insurance cost as I age? 

Long term care insurance increases in price the older you get.  The example policy from “The Complete Cardinal Guide to Planning for and Living in Retirement Workbook” below paints a nice picture of this. 

 

Age 55 Age 70
Monthly Annually Monthly Annually
$223 $2,473 $394 $4,377

As you can see, in a 15 year period, the price of the insurance increases by almost double. You also risk developing a health condition that could prevent you from qualifying. 

While these numbers are just an example from one policy, this is the general trend that most long term care insurance policies skew toward. It is going to be more affordable to buy in your 50’s and 60’s than it is in your 70’s and 80’s. 

Bringing it all together – Long Term Care Insurance

If you think you are going to need long term care insurance, and the statistics show that most people will end up needing it, it is better to buy it in advance than waiting until you actually need it. 

Buying long term care insurance too late could result in either very large premiums or being denied altogether. For most people, buying in your mid-50’s and 60’s is going to be the sweet spot, even though most claims are not filed until your 80’s. 

It is important to note, you need to find a policy that includes inflation protection if you are paying into the policy for 10-20 years to make sure you will have the coverage you need. Cardinal can help you explore all your options. 

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