Shopping for long-term care insurance
On the Internet, you can comparison-shop for almost any item, from socks to yachts. But finding prices for long-term care insurance proves more daunting.
Because policies are tailored to each individual, there can be a wide disparity in the cost of premiums, even for similar coverage. Remember, the premium you are quoted is expected to remain constant for years, which is why a 50-year-old will pay less than a 60-year-old for identical coverage. If you find the array of choices and options confusing, you are not alone.
"It's a really complex topic, and I'm the first to say I'm still learning," says Jesse Slome, executive director of the American Association for Long-Term Care Insurance (aaltci .org), an industry trade organization. "If it's complex for us -- and this is all we do every day -- for consumers, it's enough to make their eyes glaze over."
Even as the cost of long-term care insurance rises for new policies, there are ways to get a lower premium. For example, each policy has an "elimination period," the time between when a health event triggers coverage and when the company begins paying. Taking an elimination period of 90 days instead of an immediate payout will reduce your premiums. Similarly, each policy has a duration period. Policies that pay out for 10 years or longer have enormously high premiums. Slome and other experts say a three-year duration period is enough for many people. "People look at it as an all-or-nothing proposition," he says. "Insurance doesn't need to cover the first dollar and the last dollar."
Also consider lowering the daily payout amount, even though it means more out-of-pocket costs when you begin to collect. "Even if the care was $200 a day, and the insurance only paid $100 a day, nobody's going to say we don't want it," Slome says. "Some protection is always better than none."
Slome says the best time to buy long-term care insurance is between the ages of 55 and 64. The older you are, the less chance you have of even getting a policy. Slome notes that 24 percent of people 60-69 were rejected last year, generally for health reasons. For those 70-79, the rejection rate was 41 percent. "Most insurers will only write up to age 79," he says.
Slome advises shopping around, because each company has different packages and pricing. If you use an independent insurance specialist, make sure the agent is authorized to sell policies from several companies.