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How do long-term care insurance premiums vary by age?

The size of long-term care insurance premiums is heavily influenced by the age at which you purchase your policy. The older you are, the higher your premiums will be. Experts typically recommend applying for long-term care coverage in one’s mid-50s, or, at the very least, before the age of 65. Most long-term care insurance companies won’t issue policies at all to applicants over the age of 75. If they do, it will likely be at a greatly increased rate. Buying long-term care insurance early on is one of the best ways to mitigate costs.

The premiums that you pay on your LTC insurance policy are based on the age at which you first apply and increase each year on your birthdate. Annual rate increases are typically about 3% for those in their 50s and 6-8% for those in their 60s, rising to as much as 10% by the age of 65.

Why is age so important? Part of it is simply that the older you are when you buy a policy, the less time you have to pay into it before you reach the age where long-term care is often needed, so you will need to pay in larger installments. Health is the other major factor. With age comes an increased risk of health problems. Certain medical conditions – even those that are fairly common – can cause you to be “rated” by the insurance company, meaning that they will charge you more for your premiums than they would otherwise. Some insurers offer discounts for applicants who are in good health and may even allow such applicants to continue receiving these discounts after their health has taken a turn for the worse. However, these discounts become harder to qualify for with increased age. Older applicants also have a much greater chance of being declined for coverage due to health-related issues. According to the American Association for Long-Term Care Insurance (AALTCI), 17% of applicants in their 50s are denied long-term care coverage, compared to about 25% of those in their 60s and 44% of those in their 70s.

Even if you are able to successfully apply for coverage at a more advanced age, it is still likely that you will be rated and will end up paying more than you would have if you had purchased the policy earlier. The AALTCI’s 2018 long-term care insurance price index reports that a 55-year-old couple can expect to pay a $3,000 annual premium for a policy providing $164,000 worth of coverage for each of them with a 3-year benefit period, a 90-day elimination period, and 3% compound inflation protection. That same couple can expect to pay $3,490 if they purchased that policy at age 60 (a 16% increase), and $4,675 if they waited until age 65 (a 40% increase).

While age and current health are two of the most important factors determining how high one’s premiums will be, it is worth noting that there are plenty of other variables to consider as well. Prices can vary greatly depending on the amount of coverage you select, the maximum benefit the policy pays per day, the length of the benefit period and elimination period, what types of care are covered, and the total amount that will be available through the policy. Optional extras, such as inflation riders, will also impact the cost, as will location, marital status, gender, and which company is issuing the policy.

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