Determining the Best Age to Buy Long-Term Care Insurance

What’s the best age to buy long-term care insurance? I hear that question a lot. Let’s run through the factors.

Most people are considering the lifetime trade off between the premiums paid and the benefits eventually received. They want coverage but they don’t want to begin paying premiums too long before care is needed. For most people, buying LTCI before age 50 is too early. The odds are you’ll pay premiums for a very long time before needing coverage, and both insurance and LTC will change a lot over the years. The policy you buy today might not be what you want in 30 or more years.

Insurers generally want to sell to people in their early 50s, especially married couples, and design policies to appeal to them. That probably makes ages 50-55 the sweet spot for buying LTCI. You receive the best value. (It is less expensive for a couple to buy a joint policy than to buy two individual policies. Married couples should strongly consider joint policies.)

There’s a good reason not to wait much past age 55 to buy LTCI. The older you are, the less likely you are even to qualify for a policy, and especially to qualify for preferred or even standard rates.

The box nearby shows the percentage of LTCI applicants who are declined LTCI coverage within different age groups. It would be nice to avoid paying premiums from your 50s through your 60s, but the risk of doing so is that you might lose the opportunity to buy any coverage at all. Insurers are becoming much more careful when underwriting LTCI. By avoiding a few years of LTCI premiums people run the risk of not being able to buy any coverage.

This shouldn’t discourage those older than 55 from considering LTCI. By all means explore coverage options and see if your application is accepted and with a reasonable premium. But if you’re 50 or older don’t consider delaying the purchase of LTCI with the thought that you’ll receive a better trade off between lifetime premiums paid and eventual benefits received. You take an escalating risk of losing the opportunity to obtain coverage.

Of course, there are options to stand-alone LTCI policies. When you are denied coverage or the premiums are too high, consider one of the hybrid policies. These are annuities or life insurance with long-term care riders. Most insurance experts I’ve heard from say that the annuity hybrids have less rigorous medical underwriting than life insurance hybrids. We’ve discussed the hybrids in detail in past visits, and those discussions are in the Archive on the members’ section of the web site.