Retirement Watch by Bob Carlson

Author:Bob Carlson
Language: eng
Format: epub
Publisher: Regnery Publishing
Published: 2023-01-03T00:00:00+00:00

How Much Does Traditional LTCI Cost?

The cost of LTCI varies considerably between insurers and based on several other factors. It’s important to shop around, because different insurance companies charge very different premiums for identical policies to people of the same age, and even living in the same area. In its annual “LTCI Facts,” cited earlier, AALTCI usually shows the difference between the highest and lowest premiums in addition to the median premiums. In 2021, among policies purchased at age fifty-five, the premiums for male customers differed by 71 percent. For females it was 60 percent, and for couples it was 52 percent.

Another cost factor is how an insurer classifies your current health status. “Preferred” is the best health status and carries the lowest premiums. Someone with “Select” health status still is insurable but will be charged higher premiums than a Preferred individual. Insurers have different standards for determining who is classified in each status.

With those caveats, here are samples from 2021 of some average annual premiums for LTCI policies with an initial lifetime benefit limit of $165,000, according to the American Association for Long-Term Care Insurance. You can see the latest data at the AALTCI website.

For a single male at age fifty-five, the annual premium was $950 if the policy had no growth in benefits, or inflation indexing. With 2 percent annual growth in benefits, the annual premium was $1,750, and with 5 percent annual growth in benefits, the annual premium was $3,685. For a single female aged fifty-five, annual premiums for the same policies were $1,500, $2,815, and $6,400. For joint coverage of a married couple, the annual premiums were $2,080, $3,870, and $8,575.

To see how premiums vary with age, let’s look at the same policies purchased at age sixty-five.

For the single male, the first-year premiums for the different policies were $1,700, $2,600, and $4,200. For a female policyholder, the premiums were $2,700, $4,230, and $7,225. And for joint coverage of a couple, the premiums were $3,750, $5,815, and $9,675 if both were sixty-five years old.6

Those are the first-year premiums. Insurers expect future premium increases to be more in line with annual inflation, rather than the large premium increases that many insurers imposed following 2008.

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