Why you should buy long-term care insurance before you reach 60
Paying for long-term care when you're older can be very expensive. A room in a nursing home, for example, could cost more than $100,000 per year, depending on where you live. Luckily, there is something you can do when you're still relatively young to prepare for this: purchase long-term care insurance.
"Timing when to apply for long-term care insurance is a balancing act," says Nick Covyeau, a financial advisor with Swell Financial. "On one hand you don't want to purchase your policy too early as you'll likely be paying premiums for more than two decades before potentially filing a claim. But you also don't want to wait too long and experience a significant increase in your premiums."
While you may be able to purchase long-term care insurance when you're in your golden years, generally speaking, you should consider purchasing a policy before the end of your 50s to help ensure that you're getting the most coverage possible for the least money. Here's why.
Are you ready to buy long-term care insurance? Shop for a policy online now.
Why you should buy long-term care insurance before you reach 60
While there isn't a hard-and-fast rule about when to purchase long-term care insurance, for many people, buying it before turning 60 is the right decision. Here are a few reasons why.
Premiums increase with age
A long-term care insurance policy works like any other insurance product; you pay premiums now in exchange for money to use later. If you purchase a policy when you are younger, your premiums will typically be relatively low, as you typically won't need immediate access to your policy benefits. When you age, insurance companies may charge you more, as there is a better chance you'll tap into your policy benefits sooner rather than later.
For example, if you want to buy a policy paying $165,000 in benefits, the average premium for a 55-year-old man is $950 per month. At 60, the average premium for the same policy increases to $1,175 per month. If you wait until you're 65 to purchase a policy with the same amount of coverage, you'll pay, on average, $1,700 per month. The cost increases are similar for women and couples buying joint coverage.
Start comparing your long-term care insurance policy options online now.
Health is a factor
You may have to complete a health exam before you can purchase certain long-term care insurance policies. If you buy a policy before you reach 60, while you're still relatively healthy, could lower your chances of being rejected for coverage. If you purchase long-term care insurance in your 50s, however, you may have a better chance of qualifying for coverage.
You have time to plan
Planning is a key part of getting older, and purchasing long-term care insurance in your 50s gives you time to plan for when you need more help. You'll have time to consider your options, from nursing homes to assisted living or in-home care.
"If you are thinking about planning for long-term care, you are already ahead of the game," says Jeff Beligotti, vice president and head of long-term care solutions at New York Life. "Planning for long-term care before you need it can help you maintain control of a care situation. When you have a solution in place, you and your family have the freedom to make the care choices that are right for you. An unexpected long-term care event can quickly deplete retirement savings and negatively impact a portfolio."
The bottom line
Buying a long-term care insurance policy can be a smart move if you want to protect yourself and your assets as you age. Buying a policy before you turn 60 may allow you to get a fair premium while decreasing the chances of being denied coverage based on your health — and also gives you time to plan for your future long-term care needs.
