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It's important to understand that long-term care insurance premiums for newly purchased policies generally increase with age. In other words: the older you are when you buy, the more this insurance will cost. 

It’s also worth noting that long-term care insurance is medically underwritten. So, the older you are, the more likely you will be to have a medical condition that will prevent you from buying insurance, or that will cause you to pay higher premiums.

There are basically four (4) major components that drive the cost of a long-term care insurance policy. Each of these can be changed to impact the cost of your policy.They are:

1. Daily or Monthly Maximum Benefit.

This is the amount that the insurance carrier will reimburse you for care received each day (or with more flexible plans, during a given month). Selecting a lower daily or monthly benefit will lower your premiums. However you may also be “choosing” to co-insure part of the future risk.

2. Lifetime Maximum Benefit

This is usually stated as a number of years: 2, 3, 4, 5, 6, etc.  It’s very important to understand that the lifetime maximum you select does NOT limit you to that number of years. Instead, this selection is used to establish your pool of money (benefits). Someone who selects a $6,000 Monthly Benefit and a 5-year Lifetime Maximum Benefit will start with a $360,000 pool of money ($6,000 x 12 x 5).  Benefits paid to the policyholder are deducted from that pool without regard to the number of years. So this plan could last a lot longer if the claimant is using less than $6,000 per month.

3. Elimination Period

The Elimination Period (EP) is like a deductible but stated in terms of days instead of dollars. The EP – usually expressed as 0, 30, 60, 90, 120, 180 or 360 days – is the period of time, once you are certified to be on claim, that you must wait until the insurance company will begin paying your claim. Obviously, the longer the EP, the lower your premiums will be.

4. Inflation Protection

Many people buy long-term care insurance in their 50’s and are most likely to use their policy in their 80’s. The price of everything we buy tends to increase over a period of a few decades. Therefore to keep up with these costs, companies offer various inflation options that will inflate both your daily/monthly benefit as well as your lifetime maximum (pool of money). Some of these options can be very expensive. However, many insurance companies offer more affordable options that may suit your needs. Your LTC insurance specialist can also show you how purchasing a larger benefit up front with a lower inflation option may actually save you money.

Long-term care insurance isn’t affordable for everyone but it is generally less expensive than most people believe and there are ways to minimize premiums. You even may even be eligible for discounts on your policy based on your membership in an association (e.g., alumni associations and professional groups).

Remember… you will never be younger (so rates won’t be less expensive) or healthier (rates go up with medical conditions or you may not be able to qualify) and you can take control of your policy design and premiums now.

Ready to learn more about how to get started? Download your free Long-Term Care Benefit Guide, and learn more about an exclusive benefit program available to alumni.