Am I too young to buy Long-Term Care Insurance? Is it too Expensive?

Long-Term Care Insurance

As recently pointed out by the new Director of Insurance, Ray Farmer,  for the State of South Carolina, Long-Term Care Insurance is increasingly important and highly desired. We have discovered 3 main misconceptions when it comes to Long-Term Care Insurance: 1) It’s Too Expensive, 2) No option for At Home Care and 3) I am too young to purchase it.

As South Carolina’s new Director of Insurance recently pointed out, “Rates will continue to go up because of the nature of that line of business and the age of the population,” Farmer said. “But it is still a good coverage.” He pointed out that a yearly premium of say, $3,000, may be the same as the cost of just a few weeks in long-term care. According to the American Association for Long-Term Care Insurance, the average annual premium for a 50-year-old buying a fairly typical policy—pay a daily $200 benefit for 3 years with a 3% compound inflation option–is $2,235 annually.   The average annual cost for an Assisted Living Facility (one bedroom) in the State of South Carolina in 2012 was $34,500, with the Columbia (including Lexington) area at $34,185. Even a $3,000 annual premium is far less expensive, than $34,185 a year, according to a study by Genworth Financial.  NOTE: Long Term Care Insurance is another pot of money that consumers can use to help retire and age in the lifestyle that they wish.   It can be applied towards the cost of care, in some instances it may not cover all costs.

Another one of the misconceptions is that people think this insurance cannot be applied to At Home Care. Long-Term Care Insurance is very customizable. A big benefit of the insurance is that it allows one to remain in control of their care by allowing them to have their care in home, in an assisted living facility or a nursing facility.

The ideal age range to purchase Long-Term Care Insurance is between 50-65. This age group begins to think realistically about retirement and several competing financial needs, like college tuition, are behind them. Long Term Care Insurance providers look at morbidity risk—the likelihood of falling sick – thus the younger you are and less likely to get sick, the cheaper the insurance will be.  The younger you are, the less you’ll pay in premium. Premiums are also fixed like Life insurance. They cannot cancel and cannot increase your rate, unless they have a general rate increase.

You may ask, “This is all great, but where can I buy Long-Term Care Insurance?” It’s true that several of the carriers that have historically written the most Long-Term Care Insurance are leaving the marketplace, so there are only a limited number of carriers providing this coverage.  Auto Owners does still offer Long Term Care Insurance and we will be glad to help personalize a policy for you. We can help anyone living in South Carolina, Georgia, and North Carolina.

About Joe Popkowski