When is the right time to buy long-term care insurance? The younger you are, the lower the premiums in many cases.
Even if you're are in good health today, there's a good chance that you'll eventually need some type of long-term care, at least for awhile. Over 70% of people over age 65 will need some long-term care, according to a study by the U.S. Department of Health and Human Services.
Without long-term-care insurance, which typically covers the cost of nursing homes, assisted-living facilities and in-house care, the last years of life can be financially devastating for seniors and their families. According to the MetLife Mature Market Institute, the cost of long-term care is staggering:
- Private room in a nursing home: $79,935 per year
- Assisted living: $39,516 per year
- Home health aides: $21 per hour
People should start thinking about purchasing a long-term care policy at around age 50, says Jeffrey Condit, Senior Vice President and AARP Relationship Leader for Genworth Financial.
"The best rates and range of services are available when a person is still healthy. Middle age is the best time to think about buying long-term care insurance because that's when a person is most likely to qualify for a policy and when premium costs are at their lowest," says Jeffrey Condit, Senior Vice President and AARP Relationship Leader for Genworth Financial. "Genworth believes buying LTC insurance is a key element for any solid retirement plan, for anyone with assets that he or she wishes to pass along to the family, not the nursing home."
He says buying at age 50 typically has several benefits for the average buyer:
Health
Your health is geneally good, and you have assets that you want to protect (including your home).
Premiums
The premium at age 50 is significantly less than ages 60 or 70. For example, the typical premium for a married 50-year-old in good health is approximately 27% less than the same coverage for a buyer at age 60, and 62% less than the same coverage for a buyer at age 70.
Retirement planning
You are still of working age, and have a number of working years to build your retirement assets.
Inflation coverage
You can buy 5% compound inflation coverage which is a guaranteed coverage growth rate, so your insurance policy keeps up with the rising costs of long-term care.
Caregivers can also purchase long-term care insurance for their parents – but price is the issue for seniors. But it may still be affordable and available for your parents if they're in their 70s, depending on their health history. Here are some factors that affect an elder's eligibility to get long-term care insurance, and the price of the policy:
Age. The older your parents are, the higher the premium. Oftentimes, people over the age of 80 may not be able to get long-term care insurance. Check with the insurance provider directly to see if your parent qualifies.
Health. Prior or existing health conditions can raise premiums. These conditions are revealed during underwriting, which may include both an examination of your parents' medical records and a physical exam by an insurance company doctor.
Coverage. The more types of care the policy covers, the higher the premium.
Benefit amount and duration. The higher or longer the benefit, the higher the premium.
Waiting period before benefits begin. The shorter the waiting period, the higher the premiums.
For more information, visit the Genworth Financial website.