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Consumers boast many questions in their mind regarding whether or not they should buy long-term care (LTC) insurance. They often ask about the possibility that they would need this in long term. Let’s try to address this question
But before we come to the point, it’s recommended for you that you get free quote for LTC from different LTC insurance providers. It won’t cost you a dime and possess any obligation. All you need to request for a free no-obligation LTC quote. Make sure you get maximum coverage for minimum premium.
It’s usual that you’ll ask about the real risk of requiring LTC. Well, it’s either 0%, i.e, you won’t ever need this or 100% i.e., you’ll surely need it. It’s like a lottery that you don’t prefer to win while the odds are rally greater than winning.
We won’t emphasize whether it’s 0 (zero) percent or 100 percent. To make your planning on the basis of ‘averages’ is not worth, especially in terms of your individual personal health, risk or situation. It only tells what can happen if you consider say 1000 individuals. But still, it’s an important question that deserves an answer.
In 2012, a question was posed to the top-notch LTC actuaries in the charge of pricing long-term care insurance. What percent of consumers who buy LTC will use it at some point of time before they die? They must know this so they can properly price the policies consumers buy.
They were asked to provide data at different ages between 60 and 80 and here is the answer.
The lifetime chance that somebody who purchases an LTC policy at the age of 60 will use the policy before their demise is 50 percent. Therefore, 50 percent will use their LTC policy while the rest 50 percent won’t. The actuaries did the calculation on the basis of a zero day elimination slot. And surely, it assumes that you should keep the policy in force by paying the premiums regularly.
Most consumers these days, however, buy coverage with a 90-days elimination period – this is a 90-day deductible or where you will pay for required care for 90 days until the policy starts. This is an important way to make LTC coverage affordable, in today’s respect. So the actuaries were asked to take this into their consideration.
For somebody with 90-day elimination period buying the policy at 60 has a lifetime chance of 35 percent of using the policy benefits. So the 35 percent will use coverage while the rest 65 percent won’t. So you can easily assume that reason of the declination - during these 90 days, some will recover while the rest will die. Though the numbers vary for different age brackets, they don’t vary that much. If someone buys at older age, the likelihood that he/she will use the policy will slightly increase.
First, there is a 50/50 chance that you’ll use your policy. And this is the main reason for steep pricing of LTC. If you own a house for years – have you ever used the homeowner’s insurance bought for it? The same applies to car insurance as well. LTC is a real risk and the chance that you’ll be using it, is quite high. So is it a wise move? Well, with the said 50/50 chance, you must admit that it’s well worth to look into this important protective aspect.
Second, if this ratio seems to be high for you, you can consider the following – some policies impose a 90-day waiting period for nursing-home care while others impose 0-day waiting period for in-home care. If you buy that type of LTC coverage, your lifetime chance of using the benefits will be somewhere between 35 percent and 50 percent since most consumers purchase this coverage and use it for getting in-home care.
Lastly, many articles refer to the figure that 70 percent of consumers over the age of 65 require some amount of long-term care. This number is completely based on a government study performed years back and is accurate to some extent but the definition for LTC is quite encompassing and NOT relevant to a discussion in terms of LTC insurance utilization.
For instance, somebody spending 10 days in a skilled nursing home after a hospitalization may be considered by the government as getting ‘required long-term care’. But with that 90-days elimination period, they won’t be eligible for such LTC insurance benefits. And that’s why we usually don’t use that government figure and the actuaries were asked to study real-time potential that someone with LTC insurance will use the benefits of his/her policy.
Good question. I really believe that an educated person is far more likely to know and identify the risks and thus act by getting required LTC insurance for getting protected.
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