Long-term care insurance helps individuals prepare for long-term care arrangements they might need as they age. Knowing the best age to buy long-term care insurance can be a challenge. While each person’s situation is different, a few factors can help determine when to consider buying long-term care insurance.
If you’re deciding whether now is the right time to purchase long-term care insurance, here’s an overview of the basic types of policies available and when to buy them.
Types of long-term care insurance
Here’s a breakdown of the three types of long-term care insurance policies:
Traditional (stand-alone) policies
Traditional policies, also called stand-alone policies, operate similarly to other insurance policies, like auto and home. Through this policy, the insured pays a premium and files a claim only when they require coverage. Traditional policies typically limit the daily or monthly coverage they provide.
A hybrid, also called linked-benefit, long-term care policy is more expensive than traditional policies; however, it offers coverage for additional benefits like life insurance and annuity. To pay for this type of policy, the policyholder can pay a lump sum or make regular payments. Should the benefits go unused after the insuree passes away, their beneficiaries may receive some of the death benefits.
Continuing Care Retirement Community (CCRC) package policies
CCRC package policies cover the expenses of independent living, assisted living, and skilled nursing care. This is important for older adults who require assistance with daily living activities. To gain coverage for CCRCs, older adults can register through their long-term care insurance provider.
The best time to buy long-term care insurance
Under age 65
When you buy a policy around the ages 50 to 65, you can avoid reaching a state where you are deemed ineligible. Purchasing when you are younger and likely healthier might seem counterintuitive, but it provides a sense of security should you eventually require care.
Younger policyholders often have lower annual and monthly premiums, as they are less likely to need long-term care in the immediate future. Since you’re buying earlier in life, that means you will also pay premiums for decades before you need the policy.
Over age 65
Waiting until you’re over 65 to invest in a long-term care insurance policy can be risky. If you wait until you require long-term care, the insurance provider may decline your coverage. This can result in more out-of-pocket expenses and might make it difficult for you to find coverage elsewhere.
Finding your ‘sweet spot’
Most people won’t use their long-term care insurance until after the age of 65. Most people making new claims are over 85 years old and primarily use it to fund home care services. But, the “sweet spot” for purchasing long-term care insurance is between the ages of 50 and 65. Some insurance companies even recommend buying coverage as young as 40 to get the lowest possible premiums.
Other factors when buying long-term care insurance
Many timing-related variables can impact the purchase price and ability to afford a long-term care policy. These variables can also differ depending on the insurance company you choose. For instance, one company might offer more attractive premiums for younger applicants than others. Weigh your options and consider the coverage you anticipate needing before you buy a policy.
Additionally, consider your eligibility when purchasing long-term care insurance. For instance, insurance providers may decline those with pre-existing conditions coverage. According to the American Association for Long-Term Care Insurance, the following pre-existing conditions can make you ineligible for long-term care insurance:
- AIDs or HIV infection
- Alzheimer’s disease
- Amyotrophic lateral sclerosis (ALS)
- Cystic fibrosis
- Active hepatitis C, non-A, non-B, or autoimmune
- Kidney failure
- Liver cirrhosis
- Memory loss
- Mid-advanced multiple sclerosis
- Muscular dystrophy
- Parkinson’s disease
- Post-polio syndrome
- Sickle cell anemia
- Systemic lupus erythematosus
While you might not be able to predict a pre-existing condition, you can use family history to determine your risk for developing one. For instance, if an autoimmune disease runs in your family, you might consider purchasing long-term care insurance at a younger age than someone without that family history.
When you require a cane, crutches, oxygen, walker, or wheelchair, or you require help with daily living activities like bathing, dressing, feeding, toileting, or grocery shopping, it is likely too late to purchase insurance. As a result, it’s wise to err on the side of caution and buy long-term care insurance at a younger age to ensure eligibility.