The vast majority of Americans will require some form of long-term care by age 65, and unfortunately, the cost of that care is rising dramatically. Therefore, it’s wise to plan to cover these expenses before the need for long-term care arises. This is where long term care insurance comes into play. Long-term care insurance offers an affordable way to prepare for the high care costs you may face later in life. This type of coverage allows you to choose the kind of care you’d like while protecting your dignity, assets, and loved ones.
What is LTC (Long Term Care) Insurance?
Long-term care (LTC) insurance covers nursing home care, home health care, and personal or adult day care for individuals age 65 or older or those with a chronic or disabling condition requiring constant supervision. LTC insurance comes with these three features:
- Comprehensive Coverage: LTC insurance typically covers all or part of the costs for assisted living facilities and in-home care for individuals aged 65 or older or those with chronic conditions needing constant care.
- Private Insurance: This insurance is available to anyone who can afford the premiums, offering a private alternative to public assistance.
- Greater Flexibility: LTC insurance provides more flexibility and options than Medicaid, allowing policyholders to choose the care that best suits their needs.
Ideal Age For Buying Long-Term Care Insurance
The best age to purchase long-term care insurance is when you are younger because it is cheaper. For instance, based on data from the industry group, if a 55-year-old man buys a policy that will increase his benefits by 3 percent each year, he will pay about $2,500 every year in premiums. If the same man waits until he is 65 years old to buy coverage, it will cost him roughly 55% more annually — $3,875.
It is true that monthly premiums are higher for men purchasing at age 65 — however, if we look at the total amount paid into the policy by age 80 (thus taking into account payments over time), then actually they will have saved $6,750 by purchasing at this later age instead. This is compared to how much they would have saved if they had bought when they were 55.
For women, prices differ because they tend to live longer than men. If a woman gets a policy at age 65 that also increases coverage by 3% each year then it will cost her around 48% more per year ($5,850) — but she will have paid $15,250 less in total premiums by the time she reaches 80 years old than someone who bought their plan at 55.
The association stated that women who do not have partners usually pay more than men up until both reach the age of 65.
Why is it considered the best choice to buy LTC Premium in the Mid-50s?
The perfect time to invest in a long-term care (LTC) insurance policy is usually when you are in your mid-50s. There are three main reasons why:
Access to Coverage
When you have existing health issues, it can be difficult to get an insurance company to pay for your long-term care needs. Plus, as you get older, there’s a higher chance that you’ll develop a health condition that might make insurers hesitant to give you a policy. If you purchase coverage in your mid-50s, it’s more likely that an insurer will offer you a plan.
Premium Rates
Premiums are also affected by how old you are when you purchase a long term care policy. In general, if you buy coverage in your mid-50s, then premiums will be lower than they would be for someone who buys a few years later — say either in their early 60s or mid-60s. Getting locked into paying slightly lower premiums may end up saving you quite a bit throughout the life of your policy so it’s a good idea to take care of this now before it’s late.
Ability to Plan for Your Care
While LTC insurance helps cover future care costs, it does not create a long-term care plan for you. Planning for your care is crucial, whether with your spouse, a retirement planning professional, or independently. LTC insurance in your 50s provides several years between purchase and potential need, allowing ample time to develop a comprehensive care plan. These years allow you to prepare adequately for your care needs later in life.
Conclusion
In summary, buying long term care insurance in your mid-50s offers you better access to coverage, lower premium rates, and sufficient time to plan for your future care needs. While purchasing LTC insurance at a younger age results in lower annual premiums, waiting until an older age may result in overall savings on total premiums paid by the time you reach 80. When to buy LTC insurance depends on individual financial circumstances and risk tolerance. Therefore, act now to secure your financial well-being and peace of mind in the years to come.
