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When You Should Buy Long Term Care Insurance

by Jack Lenenberg

Long Term Care Insurance PlanOne of the questions I often receive is "When is the best time to buy long term care insurance?"

While certain media pundits such as Dave Ramsey might tell you that the age 60 is the magic age to buy long term care insurance, the truth is that there is no magic age.

With long term care insurance, the key consideration is you will buy the coverage with your health.

You will pay for the insurance with your money, however your ability to write the check will not guarantee you through the underwriter's door.

Only your medical records will grant you this coveted access.

Thus, Dave Ramsey's blanket advice of waiting to buy long term care insurance until you reach age 60 might be poor advice should your health change while you are waiting to celebrate the big 6-0.

To wit, my wife and I bought our long term care insurance policies at age 45.  My wife qualified for a Preferred health discount. I qualified for Select rates.  Today, we are in our early 50's.  Due to health changes in the past 8 years, neither of us would qualify today for the health classification we received years ago.

Buying Long Term Care Insurance Is Challenging As You Grow Older

As you age, your health will inevitably change.  Almost always, your health status will change for the worse.  With each annual visit to your doctor's office, your medical file will become larger with increased doctor's notes, new prescribed medication and new tests ordered.  While your doctor's visits will help you to stay as healthy as possible, with each passing year your updated files will result in a greater likelihood that your health status may prevent you from buying long term care insurance.

The percentage of declined applications increases with each age group.  Our survey with the underwriting departments reflect the following statistics for declined long term care insurance applications.

Ages 49 and under: 12%

Ages 50 - 59: 17% 

Ages 60-69: 25%

Ages 70-79: 44%

Declined For Long Term Care InsuranceAppealing a declined long term care insurance application or finding an alternative underwriter can be problematic.  In reviewing these underwriting statistics, there is no reason to wait to purchase long term care insurance should you want to be covered for future long term health care needs.

Long Term Care Insurance Costs Increase As You Grow Older

Long term care insurance is not only priced upon your health history , but your LTC insurance premiums are also priced by other factors such as your age, your gender, and your Marital/Partner status.

As you grow older, the cost of buying long term care insurance will increase with each birthday you celebrate as well.

Premium Increases With Age Change

In your 50's, the average annual premium increase of waiting to purchase coverage is 2% - 4% per year.

In your 60's, the increases to your premiums with each passing birthday will be 5%-7% per year.

In your 70's, the cost of waiting to buy long term care insurance will be 10% with each birthday.

Available Discounts With Many Underwriters

Preferred health discounts are typically 15% - 20%.

Marital and Partner Discounts are 30%

When you buy long term care insurance, you retain your Age of Issue Cost of Insurance, and Preferred Health and Partner discounts, if available, for the life of your policy.

If you wait to purchase, your health may change causing your application to be declined or for a Preferred Health discount to not be extended to you.  If you are in a committed relationship, the Couples discount could be lost if a death occurs.

With these savings and discounts available to you, it is in your best interest to submit your long term care insurance application before your next birthday if you have been thinking about buying coverage for yourself.

Future Availability of Policy Benefits and Current Pricing

Often, financial advisers will only focus on the changes to your health and the changes to your age-based premiums you will experience by waiting to apply for coverage.  There is a 3rd very important factor to consider when deciding when to buy long term care insurance:

Policy Availability 

Current policy availability (with current pricing) is often the most important but overlooked factor underscoring why it is critically important for you to consider buying your coverage today.

If history is any indicator, policies available today will almost assuredly be priced lower than the long term care insurance policies that will be filed for sale in future years.  Generally, most long term care insurance policies have a shelf life of 2-4 years prior to a block of business being closed and the new policy series filed for by the underwriter.  Almost always, the new policy series replaces the discontinued policy series at a higher price point, generally 20% higher on average.  Sometimes, the new policy series will not include benefits that are as robust as the policy series it is replacing.  This has certainly been the trend with long term care insurance for the past 20 years since I started in this business.   Every two years we have a "Fire Sale" followed by a "New Normal."

Today, we also have certain benefit features available that might not exist in the future.  

Today, we have an underwriter that still offers Unlimited Benefit Periods for you to take advantage of.

We also have an underwriter that still offers women unisex pricing.

Cash indemnity benefits are also available today with a few underwriters.

If you want to take advantage of currently available benefits and features that are available today, applying for your coverage today will be a wise choice.

Get Long Term Care Insurance Quotes

Should you be ready to buy long term care insurance and want to explore your best options, I can help you.  To receive quotes and illustrations form the leading long term care insurance underwriters such as OneAmerica/State Life, Lincoln, Mutual of Omaha, Pacific Life, Securian/Minnesota Life, Transamerica, Mass Mutual, New York Life and more please call my office at (800) 891-5824.  Or complete your free Quotes Request form.  I look forward to helping you to obtain your coverage.

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