Long Term Care Insurance - Quick Facts and Stats

The American Association for Long-Term Care Insurance estimates that for a 60-year-old couple in good health, what they deem an optimal LTC policy -- one with a $150 daily benefit at plan inception, three-year benefit period, 90-day elimination, 100% home care benefit, 3% compounded annual inflation protection, and spousal discount -- would be valued at $164,000 for each person, while at age 80, it would be $325,000 for each person. The cost of such a plan? On average ~$3,840/year as of January 2014.

Other LTC Stats

  • LTC care of some kind will be needed by 70% of Americans who are aged 65 today, according to the Department of Health and Human Services.
  • According to the American Association for Long-Term Care Insurance, premiums have risen 4.8% on average in the past two years. Estimated out-of-pocket health care costs $50,000 if retirement lasts over 10 years, and nearly triples if retirement lasts 20 years, according to the Health Care Cost Institute.
  • Despite rising LTC premiums, benefits and cost of living adjustments are being cut –most LTC carriers no longer offer what had once been an industry standard: 5% compound inflation protection. Rather this has fallen to 3% compounded annually, and in some cases has been dropped entirely.
  • Another common benefit now extinct is the “refund of premium” benefit that allowed heirs to collect premiums the client already made if the insured died before a certain age, minus any benefits already paid against the policy.
  • The LTC insurance industry has declined from its heyday in the 1970s. Only Genworth, New York Life, John Hancock and Transamerica Financial remain in the LTC business. Mergers in the LTC industry mean that some clients may find that their premiums are not honored by the insurer that acquired their former provider, and also may see higher rates, according to TIAA-CREF Life.

Want to know on average how much long-term care costs where you live? Click here to find out.