Combination Long Term Care Insurance Analysis Makes National News

An analysis revealing significant differences between the most popular combination long term care insurance policies helped generate widespread national news this week for the American Association for Long Term Care Insurance.

“We’ve seen an increase number of consumer inquiries about combination life insurance policies offering long term care insurance like benefits,” declares Jesse Slome, director of the American Association for Long Term Care Insurance.  “Our conversations revealed that consumers assumed these policies are all very similar in terms of key components, especially the amount of benefits they ultimately provide.  There is lots of interest in what many call ‘new and improved long term care insurance’ but there can be vast differences in ultimate benefits paid.”

Working with leading independent experts, the Association undertook an analysis of leading combination long term care insurance, also known as hybrid long term care policies.  “We found significant differences,” says Slome. “Some would pay far more if long term care services were needed, others had a higher life insurance benefit that would be paid to heirs.”

A release distribution of the analysis resulted in widespread media attention.  “Several hundred major media picked up the story including Yahoo Finance, The Wall Street Journal’s MarketWatch column, Reuters and some 200 newspapers, business journals and local television stations,” Slome reports.  “There has been a high level of interest in this as more consumers are being told about combo LTC products by their financial advisors.”

The Association’s analysis pointed to the value of getting a comparison from a knowledgeable combination long term care insurance specialist.   ”Not all financial advisors have access to products from multiple companies,” Slome adds. 

Tip: Save 7% On Long Term Care Insurance

There are many ways to make the cost of long term care insurance more affordable than people think, including some little known ways according to the head of the American Association for Long Term Care Insurance.

“If you recently celebrated a birthday, some insurers offer a 30-day grace period before you have the pay the next higher rate,” reports Jesse Slome, executive director of the American Association for Long Term Care Insurance, a national trade group.  “A 60-year old male will pay around $1,330 a year for $200,000 of long term care insurance but when he turns 61, that very same coverage will cost him $1,429 annually, some 7.4 percent more.”

Long term care insurance rates are based on your attained age, Slome explains.  “That is your age when you sign the application for insurance, but some companies offer a very valuable 30-day extension that is well worth noting if you or a spouse just celebrated a birthday.  The savings are locked in and will really add up over the rest of your life.”

The national long term care insurance expert noted that the rules are not consistent among all insurers.  “This is just one more reason that it is vitally important for consumers to work with a knowledgeable long term care insurance professional who can compare the benefits and costs of multiple policies,” Slome notes.  The Association’s yearly analysis of long term care insurance policy costs found that prices for virtually identical coverage could vary by as much as 90 percent.

Long Term Care Insurance Applications Cost Insurers Reports AALTCI

An individual applying for long term care insurance costs the insurer between $400 and $600 even if they are not accepted according to a study from the American Association for Long Term Care Insurance.  The approximate cost to the industry was $200 million in 2012, AALTCI reports.

“Consumers don’t realize that to keep prices as low as possible for all policyholders, insurers take the time to examine health records, conduct face-to-face assessments and all that is costly,” explains Jesse Slome, executive director of the American Association for Long Term Care Insurance.  “When the Federal government attempted to launch a plan with minimal to no health requirements, their own actuaries set premiums so high that they abandoned the program acknowledging that costs were higher than what almost anyone would pay.”

Slome noted that the Association undertook an informal study of costs related to long term care insurance applicants following a discussion with a reporter.  “Like so many consumers we speak to, this individual was surprised to learn how many individuals who apply for long term care insurance are declined due to health reasons,” Slome noted.  “We wanted to substantiate the fact that this cost insurers hundreds of millions of dollars each year.”

According to the Association’s annual research into buyers and claimants, some 25 percent of applicants between the ages of 60 and 69 are declined by insurers after they apply.   The rate is significantly lower at earlier ages.

“Each insurer has its own health underwriting practice that can include extensive review of the applicant’s medical records as well as a face-to-face interview,” Slome explains.  “The goal is not to decline people but just one additional unhealthy person within a pool of 100 insureds could necessitate a significant price increase that is ultimately shared by all policyholders.

Some 322,000 individuals obtained individual long term care insurance protection last year according to the trade group.  “The ideal time to start to look into this protection is between your mid-50s to mid-60s,” Slome recommends.