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Long-Term Care Insurance Costs

March 29, 2011 | Filed Under Finance, Insurance | Comments Off

An analysis of more than 200,000 purchasers of partnership qualified Long-Term Care Insurance policies showed a misunderstanding among consumers on the actual cost of Long Term Care coverage.   There is a perception that the cost of coverage is a bit higher than the actual price.  The reason for this is that premium costs are reported often using averages. These averages include large numbers of older buyers and other factors that result in higher costs.

The American Association for Long-Term Care Insurance(AALTCI) reported that during the first half of 2010  “one-fourth, or 27.8 percent of individuals purchasing long-term care insurance who were under age 61 pay less than $1000 a year.”  In addition, 19.4% or nearly one in five who were under age 61 pay between $20 and $30 a week for new policies.  More than 28.9 percent in this age group pay between $1500 and $2500 a year with the remainder paying more.  Less than 6.8% pay $4000 or over.

Jesse Slome, the executive director of AALTCI, says, “Studies that report average premium costs regrettably mislead the public into the perception that long-term care insurance is expensive.”

In reality, it is far more expensive to self insure if a long term care situation arises.  Long term care planning is a critical component to a solid financial plan during retirement.

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