One fourth (27.8%) of individuals purchasing long-term care insurance during the first half of 2010 who were under age 61 pay less than $1,000 a year, according to a new report issued by the American Association for Long-Term Care Insurance (AALTCI).
“The single greatest misconception held by consumers is the actual cost of coverage,” said AALTCI Executive Director Jesse Slome. “Most people perceive the cost is actually quite a bit higher than the real amounts paid by large percentages of those purchasing coverage.”
Buyers Under Age 61
Less than $999 27.8%
$1,000 - $1,500 19.4%
$1,500 - $2,500 28.9%
$2,500 - $4,000 17.1%
$4,000 and over 6.8%
Buyers Age 61 - 75
Less than $999 9.0%
$1,000 - $1,500 12.5%
$1,500 - $2,500 34.5%
$2,500 - $4,000 28.4%
$4,000 and over 15.6%
Source: American Association for Long-Term Care Insurance, November 2010, Price Study
The association’s report reveals that nearly one-in-five (19.4%) purchasers in the study who were under age 61 pay between $20 and $30 a week for new policies. More than one-fourth of buyers (28.9%) in this age group pay between $1,500 and $2,500 a year with the remainder paying more. Fewer than one-tenth of these buyers (6.8%) pay $4,000 or more.
“Studies that report average premium costs regrettably mislead the public into the perception that long-term care insurance is expensive," Slome argued. “Averages include large numbers of older buyers and other factors that result in higher costs. The fact is that many people pay far less than the average amounts reported.”
Costs for long-term care insurance can vary significantly based on the age when one applies, the ability to take advantage of discounts offered to healthier applicants as well as the amount of future benefits desired, according to AALTCI.
According to the report, the average age for new individual purchasers is now 57. Eight out of 10 (80.5%) new individual buyers in 2009 were younger than age 65 when applying for long-term care insurance of 155,000 new applicants.
AALTCI research acquired data from 155,000 new applicants, and pricing data is based on an analysis of over 200,000 purchasers.