One-third of long-term care insurance policies sold to individuals in 2007 were purchased by those under age 55, according to the American Association for Long-Term Care Insurance. All told, 400,000 new policies were issued last year to individuals and groups.
Long-term care insurance is becoming a staple of financial planning and individuals who buy insurance at a younger age can qualify for discounts based on health qualifications that can be locked in, says Jesse Slome, the association's executive director.
For those over age 60, rates can go up 8% or 9% a year for each year a person delays buying the insurance. Rates vary by company, but a policy today costing $857 a year for a single 35-year-old person would cost $983 for a single 45-year-old person. The numbers are based on a benefit of $100 a day, for up to three years with a 5% per year inflation clause. Rates are lower for married people.
"If the implication is that it doesn't cost much more when you wait 10 years, there are two shortfalls to that reasoning," Slome says. "You are not insured and you could have a need for it, and, in 10 years, you wouldn't be pricing coverage on a $100 daily benefit but on a higher amount" because the policy benefit automatically increases for inflation.
The study showed that policyholders in their 20s and 30s have already filed claims on their policies.
"Data confirms that some younger policyholders will actually receive benefits from their protection as a result of an accident or illness," Slome says. Information was culled from leading long-term care insurers such as John Hancock, Genworth and MetLife. The study is available in the association's 2008 LTCi Sourcebook.