Trends in LTCi

Average Costs For Long Term Care Insurance Rise 8.6 Percent

High claims, low interest rates converge

Los Angeles, CA – January 27, 2015 – Overall costs for new long term care insurance coverage increased 8.6 percent compared to one year ago, according to the just published 2015 Long Term Care Insurance Price Index.

"A healthy 55-year old man can expect to pay $1,060-per-year for $164,000 of potential benefits, compared to $925 last year," reports Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). "The average cost for a 55-year-old single woman is $1,390, an increase from $1,225-per-year (2014)."

Each January, the trade group releases the findings based on top-selling policies offered by leading insurers. "Rate increases are the result of both higher claim costs and the historic period of low interest rates," Slome explains. Last year, long term care insurers paid out a record $7.5 billion in claim benefits and the Association predicts the industry will pay some $34 billion in annual claim benefits by 2032.

Impact of Inflation

A healthy 55-year old man can expect to pay $1,060-per-year for $164,000 of potential benefits, compared to $925 last year

According to the 2015 Price Index, a married couple both age 60 would pay $2,170-per-year combined for a total of $328,000 of long term care insurance coverage. In 2014, the Association reported a couple could expect to pay $1,980.

Adding an inflation growth option that builds their benefit pool to a combined $730,000 at age 85 will added $1,760 to the couple's yearly cost. A wider spread between the lowest and the highest available costs for each segment analyzed was found by the Association. "The largest spread now represents a 119 percent difference between the lowest available cost and the highest rate one pays for virtually identical coverage," Slome points out.

Much of the difference still impacts single women as insurers continue the trend of charging single women more for coverage due to their increased likelihood of needing long-term care. AALTCI reported a larger spread in costs than in prior years. "In some situations the difference between the lowest-cost policy and the highest-cost was 34 percent but it could be as much as 119 percent," Slome points out.

"Our average 55-year old woman could pay as little as $890-a-year or as much as $1,829 based on which insurer she buys from." Established in 1998, the American Association for Long-Term Care Insurance focuses on creating greater awareness for the importance of long term care planning and supports insurance professionals who market LTC solutions.