I'm 38 and have never given LTC insurance much thought, but my parents (in their 60's) are now paying an arm and a leg on premiums. I don't want to wait as long as my parents did, but also don't want to buy it too early. What is a good age to purchase LTC insurance?
I would say the sweet spot to purchase Long Term Care Insurance is in your early to mid 50's. However, with that being said, the premiums on a Long Term Care Insurance policy are lower by age. Also, the need for Long Term Care Insurance could potentially happen at any time (for example, if you were hit by a car and became paralyzed). I have also seen certain disease like Alzheimer’s and Dementia hit people at a younger age. The point is, you never know if and when you may need assistance. If you have the cash flow at an earlier age, it doesn't hurt to take a look at it younger. Please keep in mind Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable.
Melissa Levin, CFP®, CFS CA Insurance Lic #0C56086 714-547-8787
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Dear Auburn, Conventional wisdom is to consider this insurance in your 50s - assuming there are no health issues that prevent you from being underwritten at that time (and no one can predict the future!). Remember that paying for this insurance sooner means lower premiums but many more years of premiums. BTW, I recommend you always add the maximum 5% compound inflation to any policy so this doesn't become a rapidly shrinking band-aid.
Auburn, Normally look at Long term Care at age 45-65. When ready take a look at not only traditional Long term care insurance but also the Hybrid products available. There are companies that offer guaranteed Universal Life products with an annual premium with a Chronic Illness Rider. These Policies allow you to access the face value in advance for LTC needs. The others allow you to take assets and realocate a lump sum to a UL product and provides you with a multiple of Life insurance and Long term care buckets. Thus no premium increases! These products I believe will be the future of Long Term care Planning as more and more inusurance companies are getting out of the market, ie MetLife, Prudential.
When I first started selling LTC insurance in the mid 1980's the average age of a buyer was something like 72. Today it has fallen dramatically and is below age 60. My recommendation is, the sooner you can afford to buy it the better. Rates will be very affordable at your age and there are a substantial number of "young" people now getting benefits from their LTC policy, usually due to a catastrophic accident causing a traumatic brain injury or spinal cord injury. LTC insurance is not just for nursing home care. Even better, if you buy it today vs. buying it when you are 55, you will pay less in premiums by the time you reach age 80 by buying it today just do to the higher cost at older ages.
The correct age is when you start your retirement planning. You will realize that health care costs are enormous. The figure used in calculating the amount of assets required to fund long term care is $230,000. Once you review your assets and projected income at retirment you have to decide if you want to insure all of the $230,000 or portion of it. If you are in the "I can't fund any of it from my assets or income" group; then the sooner you seek coverage the better; as the cost of waiting is always higher when you get around to it.
