The best times to get cheap long-term care insurance
Purchasing long-term care insurance can be a smart move, as long-term care can be costly, especially if you're paying out of pocket. And, when you factor in that most adults will need some type of long-term care after the age of 65, it can make even more sense to consider a long-term care insurance policy.
But the cost of long-term care insurance premiums can range, on average, from hundreds of dollars to thousands of dollars each year, with the price dependent on a wide range of factors. You may be able to avoid premiums on the higher end of the long-term insurance price spectrum, though, if you purchase your long-term care insurance policy at the right time.
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The best times to get cheap long-term care insurance
Here are some of the best times to get cheap long-term care insurance:
When you're young
"Age and the likelihood of health issues (morbidity) influence long-term care insurance costs," says Andy Freedman, vice president of client experience and corporate marketing at Assured Allies, a financial planning and insurance firm that serves older Americans. "Since this risk is lower at a young age, you're in a prime position to lock in a cost-effective policy with valuable benefits."
For example, a 55-year-old man in good health would pay, on average, about $900 per year for a long-term care insurance policy with $165,000 in level benefits, according to the American Association for Long-Term Care. A 65-year-old man would pay about $1,700 annually for the same coverage.
That trend is similar for women. For example, a 55-year-old woman in good health would pay an average of $1,500 annually for $165,000 in level long-term care insurance benefits. The same plan would cost a 65-year-old woman about $2,700 per month.
Purchase long-term care insurance now to lock in your rates.
When you're healthy
Your health is another factor considered by long-term care insurance providers. Those in good health are less likely to need long-term care than those with pre-existing medical conditions. In turn, you would typically pay less for long-term care insurance when you're healthy than you would if you waited to purchase coverage and subsequently developed health conditions.
When you purchase life insurance
Standalone long-term care insurance policies can be a smart way to pay for long-term care expenses, but you may get a better deal if you bundle your long-term care insurance needs with your life insurance.
You can typically customize your life insurance coverage with riders, which includes the option for a long-term care rider. Adding this rider to your life insurance policy allows you to use a portion of your death benefit to help cover the cost of long-term care in the future.
However, there are a couple of caveats to consider:
- It may not be tax deductible. If you add a long-term care rider to your life insurance policy, "make sure it is a true 7702b rider, which means it meets the federal guidelines of a true tax-qualified long-term care insurance product," says Rhonda Bills, trainer at Certification for Long-Term Care. Otherwise, your premiums may not be tax deductible.
- There's no inflation protection. Long-term care riders "do not have inflation built into the policy," says Bills. "Thus if they have a $100,000 death benefit and it pays 4% a month for long-term care, the most it will pay per month is $4,000." That may be fine in today's economic climate, but in a decade or two, the impact of inflation would likely make today's $4,000 monthly benefit ineffective in terms of meeting your long-term care needs without inflation protection.
- Your premiums don't stop: When you purchase a standalone long-term care insurance policy, you'll typically stop paying premiums when you need care. But you'll likely need to continue paying your life insurance premiums if you need long-term care while leaning on a life insurance rider for coverage.
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The bottom line
Long-term care insurance doesn't have to be expensive. You may be able to get it cheaper by buying it when the time is right. So, consider purchasing your policy when you're young and healthy or bundling your long-term care insurance needs with your life insurance policy to potentially tap into cheaper premiums. Also, be sure to compare your coverage options, as some will be cheaper than others. Get started and compare leading long-term care insurance providers here.
