A 55-year-old male should expect to pay around $5,300 annually for an average linked-benefit long-term care insurance policy according to the just-published Price Index.
The first price analysis comparing leading linked-benefit insurance costs and benefits was recently published by the American Association for Long-Term Care Insurance.
“Linked-benefit long-term care insurance combines the benefits of a life insurance policy with a rider that can provide long-term care benefits,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance. “These policies now outsell traditional long-term care insurance making it time for us to do a more extensive comparison of costs and benefits.”
The organization analyzed policies with an initial monthly benefit of $4,000-per-month.
“We view this as a good starting point. It is a level of basic coverage that’s suitable for many and also affordable,” Slome notes. Policies analyzed included a 3 percent compound inflation growth option. “At age 90 the policyholder would be eligible for about $11,250 in monthly long-term care benefits,” Slome adds.
According to the 2022 Linked Benefit Long-Term Care Price Index annual premiums for a male age 55 ranged from $5,235 to $6,100. For a female, age 55, the premiums ranged from $7,138 to $7,224.
“The more significant difference is the value of future benefits both the long-term care benefits as well as the death benefit,” Slome reports. The maximum long-term care benefit available when the policyholder currently age 55 reached age 85 ranged from $568,801 to $753,627.
Likewise, death benefits ranged according to the organization’s analysis. For a 65-year-old male purchasing coverage, the death benefit at age 100 ranged from $100,000 to $384,523. “These products have their define pros and cons compared to traditional long-term care insurance,” Slome cites. “Because it almost never pays to switch policies after buying, spending time to compare costs and benefits is of paramount importance.”
The Association’s analysis reported information for both men and women purchasing coverage at ages 55 and 65.
Four of the nation’s leading linked-benefit insurance companies were analyzed (without providing specific company names). The analysis only included policies filed as IRC 7702B linked-benefits.
“The growing popularity of linked-benefits created a need for increased consumer education,” Slome advises. “There is clearly much information that will benefit both consumers as well as financial and insurance professionals.” Slome recommends consumers interested in linked benefit policies do their due diligence before purchasing coverage.
“One of the overlooked steps is requesting a specimen contract from your financial advisor or insurance agent,” the long-term care insurance expert suggests. In particular look if the policy meets the Internal Revenue Code 7702B standards. “Today there are multiple policies that look and feel like long-term care insurance,” he notes. “If they are chronic illness riders, there may be situations where benefits won’t be paid as expected.”
About Jesse Slome…
Jesse Slome is director of the American Association for Long-Term Care Insurance. Headquartered in Los Angeles, the national organization established in 1997, advocates for the importance of planning. To find long-term care insurance costs for both traditional and linked-benefit solutions visit the organization’s website.