I had originally spoken with a lady from Greenwich, CT two years ago about buying a long term care insurance (LTCI) policy. At the time she decided not to buy long term care insurance because she felt she had “sufficient assets to self-insure” her long term care risk. My phone rang last week and it was that same lady, she said she’ll now will buy her LTC policy. Like most Baby-Boomers, she had seen her nest-egg be cut in-half and no longer had the option to self-insure the risk in her mind. This economic tsunami has torched boomer’s retirement accounts and our web-sites and offices have been flooded with people looking to secure their long term care risk by buying a policy. What we are advising most people is if they are somewhat on the fence about buying LTCI to at least hedge the risk. What is meant by that is if the average cost of care is say $200/day, buy a $120/day plan so at least the majority of the cost would be paid for. That method will take most of the risk off the table while keeping premiums down.
Another thought came to mind after reading an article on younger and younger baby boomers buying long term care from Investment News. They brought up some interesting facts:
“The age of long term care insurance purchasers continues to skew downward as more baby boomers buy policies, according to data released Wednesday by the American Association for Long-Term Care Insurance.
During 2008, 53% of individual LTC insurance buyers were between the ages of 55 and 64 — up from 50% in 2007, according to poll data from the AALTCI of Westlake Village, Calif. The trade association had analyzed data on 215,000 purchasers of individual LTC coverage.”
At LTC Tree what we’ve found is that people who buy around 55 years old will pay just around $2,200/yr on premiums assuming good health and an average amount of coverage. If that same person waits until age 65, they would have paid an average of $4,000 for less benefits. I looked back at about 10,000 of our cases last year in various States and discovered that people were certainly buying more per day in benefits. 65% of our sample $150 to $200 in daily benefits in 2008 year, up slightly from about 40% in 2007.
Another trend LTC Tree spotted with the sample was that about 75% of our clients chose policy with a cash limit on it which was slightly down from 78% in 2007. The unlimited benefit long term care insurance policy still resonate with a good chuck of buyers. Most of the baby boomer buyers have had close family members with conditions such asAlzheimer’s and Parkinson’s diseases. Just food for thought on this Friday morning, thanks for reading our bog…we really appreciate it.
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