Age for getting long term care insurance?

[Realestatedoc]

With prices of nursing homes being $9,000/month, what age do people recommend getting long term care insurance in order to avoid nursing home costs decimating your entire estate? I've heard these rising costs have led to more and more denials of applications for LTC insurance so best not to wait too late.

[DK Unger]

Typically, it is recommended to establish long term care insurance when one is in their 50s.

We recommend an alternative to traditional long term care insurance.

Prudential Insurance Company of America offers a permanent life insurance policy with a "BenefitAccess Rider" which allows you to access the policy's death benefit with no receipts required for claim approval if you:

Cannot perform at least two Activities of Daily Living without
substantial assistance and will likely need assistance for the
rest of your life; OR
Require substantial supervision and protection from threats
to health and safety due to a severe cognitive impairment, and
will likely require supervision for the rest of your life.

It is more flexible than traditional LTC insurance since no receipts are required to claim benefits; you can spend the benefit money however you would like. For example, you can use the benefits to pay for family members or friends to visit and/or take care of you. And if you do not end up accessing the policy's death benefit, then your beneficiaries will receive it upon your death. Unlike traditional LTC insurance, benefits will be paid.

[jfoxcpacfp]

That's a really good question. Our general recommendation is late 50s, early 60s, but you are correct that the landscape is changing and the providers are consolidating because costs have been so much higher than original estimates. If your family has a history of Alzheimer's, you might consider getting coverage earlier. Our clients, so far, haven't experienced denials, but the rates increase as you age, plus you are more likely to have conditions that will increase the premium.

Policy terms vary widely and it's important to review with a non-biased professional who is versed in this kind of coverage (or do your own homework) when shopping.

[LBKCLU]

Johanna is correct that the policies have changed tremendously over the last few years. The number of claims, as well as, the duration of claims was significantly underestimated.

As a result, the premium rates have increased significantly (for inforce policies along with new offerings). Lifetime benefit periods (paid benefits until death) no longer exist, policies that were called "Ten Pay" (pay premiums for 10 years but have coverage forever and after the 10 years, even if premiums increased, your policy was not impacted) are no longer available. Policies that reimbursed on a cash basis (without receipts documenting expenses are no longer available). Does this mean you should not purchase coverage? No, but understand that polices are changing and your cost will not be guaranteed when you make the purchase. As a result, you might find yourself in the situation where you need to cut back on your policy's benefits in the future if you want to pay the same premium when you purchased the policy originally.

Due to this more and more insurance companies are offering hybrid products like life insurance with an Long-Term Care Rider or other investments with some type of Long-Term Care component to them.

As with any other insurance product, you need to speak with people that specialize in this area, understand the offerings from all of the carriers (but there are not many left), have access to discounts and can help you decide what is best for you and your family based upon your individual needs, goals and budget.