Among the key variables are your age, health, location, the level of benefits you choose, whether you include inflation protection in your policy, and the elimination period you choose. Depending on your lifestyle and other factors, you may also qualify for preferred rates and discounted premiums.
Age
Age is an one of the most important factors in estimating the premium rate for a long-term care policy, because age is directly related to the probability that you will need long-term care. In fact, age may determine whether you can purchase a long-term care policy at all. Most insurance companies do not write long-term care policies for individuals under the age of 40 or over the age of 84.
As an example, a 65-year-old purchasing LTCI might pay three times more than a 50-year-old would pay for a policy providing the same benefits. An 80-year-old might pay ten times more than a 50-year-old for the same level of coverage.
Note: Once you purchase long-term care insurance, you'll always pay the same rate as someone who is currently as old as you were when you purchased the policy. The insurance company can increase your premiums, but only if they raise the rates for an entire class of policyholders. For example, if you purchase a long-term care insurance policy when you're 55, you'll always pay the same rate as a 55-year-old buying a new policy.
Level of benefits
LTCI premiums are also directly related to the level of benefits you choose, including the size of the daily (per diem) benefit, and the benefit period. For example, a policy that pays $100 per day for up to five years of nursing home care would be more expensive than a policy that pays $75 per day for a maximum of two years of nursing home care.
Inflation protection
Most experts agree that purchasing a policy with an inflation rider is almost as important as purchasing a policy in the first place. With the rising cost of long-term care, a LTCI policy without inflation protection could become practically worthless in a matter of years. What might seem like plenty of coverage now could be completely inadequate by the time you actually start collecting benefits a few years down the road.
Elimination period
The elimination period refers to the number of days you must be receiving long-term care before your LTCI policy begins paying benefits. Most policies offer a choice of elimination periods ranging from zero to 100 days. A shorter elimination period means you will start receiving benefits sooner, but it also means higher premiums. LTCI policies often include separate elimination periods for different types of care (skilled care, intermediate care, and custodial care).
Note: If you are covered by Medicare and you have a good supplemental Medigap policy, your first 100 days of nursing home care should be completely covered. Thus, you could purchase a LTCI policy with a long elimination period (for nursing home care), and cut your costs without sacrificing coverage. However, you could miss out on coverage for home care, adult day care, etc.
Preferred rates and discounts
A preferred rate is often substantially lower that the standard rate. Insurance companies set their own discount levels and qualifications for preferred rates, but it is not unusual to save up to 25 percent if you qualify. Typically you can qualify for preferred rates if you have not smoked for at least five years; and you don't take more than two medications per day. Additional standards may apply as well.
Insurance companies also typically offer discounts if you and your spouse purchase LTCI from the same insurer. The amount of this discount varies, but is often in the neighborhood of 10-15 percent. Insurance companies offer this discount as an incentive to purchase multiple policies, but also because spouses living together can provide each other with a certain level of care that would otherwise be provided by outside sources. Spouses living together also tend to delay nursing home care for as long as possible, preferring to stay at home instead.
Please Note: The information contained in this Web site is provided solely as a source of general information and resource. It is a not a statement of contract and coverage may not apply in all areas or circumstances. For a complete description of coverages, always read the insurance policy, including all endorsements.