Seniors may wish to consider taking out long-term care insurance when they’re in their early to mid-60s. According to the Urban Institute and the US Department of Health and Human Services, around 70% of those who reach the age of 65 will require long-term care at some point in their retirement. The cost of long-term care services varies depending on the type of care required and the location of the care community, but the average cost of assisted living in the United States is $4,500 per month. Long-term care insurance can help seniors have some peace of mind that their needs will be cared for in the future.
Each long-term care insurance provider can set their own policies when it comes to age limits, pre-existing conditions and annual maximum benefits. Seniors over the age of 70 or with a pre-existing medical condition that is likely to develop to the stage where they’ll require support in a long-term care facility may struggle to be accepted by an insurance provider. If they are accepted, they may have their maximum annual payments capped. The payments made by long-term care insurance providers can be used to cover the cost of any long-term care services that would not otherwise be covered by Medicare or, if the senior is eligible, Medicaid.
In general, it’s best to take out insurance before you need it, and the sooner the better so you build equity. In the case of long-term care insurance, seniors need to find a balance. On the one hand, taking out a policy at a younger age means benefiting from lower premiums, but paying those premiums for a long time before needing long-term care. On the other hand, taking out a policy later in life means paying a higher premium and the risk of being denied coverage from waiting too long.
On average, those who start a policy between the ages of 60 and 65 pay less over the lifetime of their long-term care policies than those who take out coverage before the age of 60, or when they’re over 65. There are exceptions to this. Someone may require long-term care in their early 60s, or be fortunate enough to remain healthy and mobile well into their 70s. However, nobody knows the future, and long-term care insurance is a hedge against the risk of becoming unwell or losing mobility.