Higher percentages of young people are buying long-term care insurance when it is offered in the workplace, while those buying the same insurance as individuals remain, on average, older and more affluent, says a recent survey by the American Association of Long-Term Care Insurance (AALTCI).
One-third of long-term care insurance purchasers in group policies are between the ages of 35 and 44, while only 5% in the individual market are in that age range. At the same time, half of individual buyers are between 55 and 64 years old, while only 24% of group buyers are in that older age range.
Insurance agents and financial planners who advocate long-term care insurance for individuals usually target an older and more affluent client, which accounts for the percentage differences, says Jesse Slome, spokesman for the association.
Long-term care insurance is substantially less expensive for group buyers, and employer-sponsored plans often offer a simple enrollment process with minimal health requirements or guaranteed coverage to all who apply. Group plans also often offer a "future purchase option," meaning the insured can opt to buy more coverage at a later date, rather than being locked into a rate and benefit when they first sign up, which encourages younger people to join.
The average price for group coverage for people ages 35 to 44 is $438 a year, compared to $1,120 for those ages 55 to 64, says the AALTCI survey. Assuming no rate increases for either group, a 35-year-old who buys a policy and starts collecting at age 70 would have paid $15,330 for coverage. A 55-year-old who collects at age 70 would have paid in $16,800.
But buying on the individual market paints a different picture. A study conducted in New York state that compared slightly different ages from the AALTCI study reveals those under 44 years old pay a mean rate of $1,535 a year. Those 55 to 59 pay a mean of $2,398. Roughly speaking, a 35-year-old in the individual market collecting at age 70 would have paid in $53,725, compared to a 55-year-old insured on the individual market collecting at age 70 who would have paid in $35,970.