by John Darer CLU ChFC MSSC RSP CLTC
The American Association for Long Term Care Insurance recently surveyed leading LTC insurers regarding their largest open claims and the results show not only a significant value for money, but a very real exposure that goes beyond the typical 3 year benefits that are commonly sold or purchased.
Company A had an open claim of $1,700,000. The female client paid $881 each year for 3 years before going on claim where she remained through December 31, 2011 (the measuring point of the survey).
Company B had an open claim of $1,084,343. The initial premium paid by the male claimant was $5,500 and he went on claim after 8 months, where he has remained for 9 years and 8 months!
Company D had an open claim of $848,645 The initial premium of $4,468 was paid for 2 years and 2 months before the female insured went on claim, whgere she has remained for 6 years and 4 months.
The national average daily rate for a semi private room in a nursing home for 2011 was $209 and $233 for private. The top facilities in Connecticut exceed $400 per day. Assisted living costs at top facilities in New York City metropollitan area exceed the national average nursing home costs.
Cities like San Francisco, Washington DC, Hartford and Boston are expensive tickets too.
It's easy to see why long term care insurance is a good defensive investment for the long haul. And more and more Americans at younger ages are seeing it that way as they look toward the future. They want to avoid having to reallocate retirement portfolios to pay for extended care when a sinking fund can be started today.
A $200 per day policy purchased today with a 3% compound inflation rider will be worth $260.95 in 10 years or $350.70 per day in 20 years.
One of the most significant statistics cited by AALTC in its 2012-2013 sourcebook, is that the percentage of Americans buying long term care insurance in 2012 has almost tripled over 2011 for those under age 35 and a further 21% of purchasers fall between the ages of 35-44 another triple! Sales also rose for the 45-54 age group.
41% of people are buying $200 per day or more of daily benefit.