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LTC Insurance Blog
Simplifying the process of understanding Long Term Care, and helping you decide if Long Term Care insurance is right for you.
Should I Wait to Buy Long-Term Care Insurance?
Many people ask, "Should I wait to buy Long-Term Care insurance when I'm older because I don't think I'll need if for a long time. I'll be paying for it all those years that I won't be using it". This is a very good question.
Let's suppose that there are two people who both buy LTC insurance, one age 50 and the other age 65. Both will have an LTC claim at age 80. The 50 year old will pay premiums for 30 years and the 65 year old for 15 years. It seems like the 65 year old would pay a lot less premium over their life because they are paying for half as long, but that is not the case. I'm going to explain exactly why buying LTC insurance when you are younger will save you money and get you more benefits.
Reason #1: Prices are based on your age when you apply
Long Term Care insurance rates are based on your age when you apply. So let's say that our 50 year old waits until age 65 to apply. They will be paying much higher rates for the same level of benefits. This is why people buy life insurance when they are young...the price is so much lower.
Reason #2: The Longer You Wait the More Coverage You Must Buy
Every year the cost of Long Term Care services goes up due to inflation. If you wait 15 years to buy a policy, the cost of services could have doubled in that time. So now you will be buying much more coverage at a higher price based on your age.
For example: Let's say the 50 year old was going to buy $100 in daily benefit; if they choose to wait until 65 they may have to buy $200 in daily benefit to have the same buying power.
Most policies sold today include inflation protection that causes the benefits in the policy to grow over time. This is built into the price so that the policy holder never has to buy additional coverage later in life at a higher price due to their increased aged.
Reason #3: Your Health Affects LTC Insurance Prices
Insurance companies offer discounts for good health and charge additional premium for people with major health issues. In general our health declines as we age, so the longer you wait to apply the less likely you will be to get a preferred health discount and the more likely you will be to pay an up charge for health problems.
Reason #4: Claims Happen at Younger Ages
There are many claims at younger ages due to accidents and now an increasing number of early onset Alzheimer's claims. This often happens when people are in their 50s and takes them by complete surprise.
When you sign up for a LTC policy the full benefits are immediately available. So in the unfortunate case that you have a claim in your 40s, 50s, or 60s, the benefits are there for you.
When you take these factors into account, waiting 15 years could cause you to pay thousands or tens of thousands more in premiums over your lifetime, and you would not have coverage those 15 years.
You will not save money by waiting. The sooner you apply the less you will pay over your lifetime. LTC Insurance really starts to make sense in your 40s and should really be purchased sometime in your 50s. If you find yourself in your 60s or 70s, LTC insurance is still a good buy and is far better than paying for the care out of your own pocket.