When it comes to long-term care planning, one of the most common misconceptions is that insurance policies can be purchased at any age. With more Americans living well into their 80s and 90s, planning for the real risk of eventually needing care takes on added importance.
In terms of long-term care insurance, the adage is your money pays for coverage but it’s your health that really buys it. This is especially true as one reaches milestone birthdays. This begs the question, can someone purchase long-term care insurance after they reach age 75?
The short answer is maybe. It will depend on a combination of factors, including your health, what prescription medications you take, your height and weight and finally whether you can afford the cost of premiums.
If you are considering long-term care insurance for yourself, a spouse or an aging parent, here is information that provides an important overview.
Do Insurers Offer Long-term Care Insurance Past Age 75?
Yes, some do. There are generally two types of long-term care insurance policies available today. Traditional long-term care is the form most people have. It covers qualifying care at home, in an assisted living or skilled nursing home setting.
The other form is commonly referred to as a linked-benefit long-term care policy. These often are life insurance policies with long-term care riders. If you need long-term care, the policy provides benefits. If you don’t, there’s a life insurance death benefit paid to your designated beneficiary.
Traditional long-term care insurance policies generally accept applicants between the ages 30 and 79. Linked-benefit policies can be found that accept applicants to age of 80. One will actually accept up to age 85.
What Health Conditions Will Prevent Me From Getting Insurance?
Individuals are often shocked at the number of health conditions that long-term care insurers will not accept. They can be quite different from the requirements for senior life insurance policies. Indeed, some underwriting guides contain multiple pages of conditions. Those who are already in need of assistance to perform daily activities of living, the use a wheelchair or cane, or individuals currently receiving physical therapy will be declined.
A recent surgery or hospitalization can result in a decline as can such conditions are back pain, severe arthritis or even depression. Each insurer will also issue a listing of medications that are not acceptable. These should be discussed with your long-term care insurance agent.
How Much Does Traditional Long-term Care Insurance Cost?
Experts advise that the ideal age to purchase long-term care insurance is sometime between ages 55 and 65. Costs for coverage will increase each year you wait.
An analysis by the American Association for Long-Term Care Insurance reports that long-term care insurance costs for a 75-year-old man will be around $7,000 a year for $162,000 of initial coverage. The policy benefit value will grow at 3 percent compounded so that by age 90, the available benefit pool will equal $252,390.
A similar-aged female applicant will pay around $12,000-per-year for identical benefits. Women pay significantly more for long-term care insurance coverage due to the fact that women make up around two-thirds of all claims.
Costs for Linked Benefit Long-term Care at Age 75
Linked benefit or combo long-term care policies combine a life insurance or annuity policy with an added long-term care rider. These policies are designed to provide long-term care benefits if needed. If the policy is not used for long-term care, or not fully utilized, a death benefit is paid to the designated beneficiary.
Because linked-benefit long-term care policies provide double duty, they can be expected to cost more. Many of these policies offer a single pay provision or require multiple yearly payments over a designated time period.
A 75-year-old male could expect to pay $43,400-annually for a five-year period to obtain an available maximum long-term care benefit of $504,000 at the age 0f 90. The policy’s death benefit at age 100 would be $108,000.
Price differentials for women are not as significant as with traditional long-term care insurance. The annual premium cost for a 75-year-old female applicant would be $50,275 with five payments ending at age 80.
Ways to Find and Compare Coverage Options
While comparing costs is always of paramount importance, at older ages it pays to start by making sure one can meet the health qualifications imposed by different insurance companies. While most insurers follow similar guidelines, there can be differences based on a company’s particular experience with certain health and medical conditions.
It generally costs an insurance company around $600-to-$800 to health underwrite an individual applicant. Twice that amount when both spouses or partners apply. As a result, some insurers will not consider an application from someone who has already been previously declined by another insurer.
For this reason, those considering long-term care insurance at older ages should find and work with a knowledgeable long-term care insurance agent with knowledge of both traditional and linked-benefit policies. You can connect with them via the American Association for Long-Term Care Insurance which recently established a resource center containing valuable information on the topic.
About Jesse Slome
Medicare Expert – Director Long Term Care Insurance Association, Medicare Supplement Insurance & Critical Illness Insurance Association