Cost of Waiting to Purchase LTC Insurance

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The longer a person waits to purchase Long Term Care insurance, the higher the premium. For example, if you defer buying a policy until age 60, you might have to pay an annual premium of almost 2.5 times more than if you were to purchase it at age 50. Waiting 20 years would have an even greater financial impact on the cost.

Age	Age When Buying LTC	Monthly * Benefit	Annual Premium	Total Premiums to Age 80	Cost of Waiting
50	50	$6,000 ($200/day)	$1,578	$47,340	--
		Compound Value of $6000 Monthly Benefit if purchased at age 50	Annual Premium for Equivalent Benefit at Current Age	Total Premiums to Age 80	Cost of Waiting
55	in 5 years	$7,700 ($257/day)	$2,275	$56,875	$9,535
60	in 10 years	$9,800 ($294/day)	$3,777	$75,540	$28.200
65	in 15 years	$12,500 ($417/day)	$6,867	$103,005	$55,663
70	in 20 years	$16,000 ($533/day)	$12,664	$126,640	$79,300

* Guaranteed renewable coverage. Based on a policy with $6,000 of Nursing Home monthly benefit, $4,500 (75%) Professional Home Care monthly benefit, 6-year benefit period, 5% compounding inflation and 90-day elimination period. Total premiums are estimators only. Benefit amounts are rounded to the nearest 100.

3 Reasons to Buy Long Term Care Insurance NOW

Each year you wait.

Increases the annual cost of protection due to increases in Nursing Home and Home Health Care.

Requires paying a higher premium due to your increased age.

Puts you at risk of not being medically able to qualify for benefits.

Cost Analysis of LTC Premiums vs. Benefits**

Assumptions: $6,000 monthly benefit, 5% compound inflation annually.

Number of Years that Premiums Are Paid by a 50-Year old

Total Premiums Paid (approximate)

Months of Benefits to
Equal Total Premiums Paid

2

$3,156

1/2 month

monthly benefit = $6,300

5

$7,890

1 month

monthly benefit = $6,300

10

$15,780

1 1/2 months

monthly benefit = $9,300

20

$31,560

2 months

monthly benefit = $15,200

** Based on a national average, a year in a nursing home is estimated to cost $46,000. In some areas it can cost twice as much. The annual premium may increase on a class basis within a state.

The comfort in knowing you have protection offsets the cost of coverage. The numbers show that it makes more sense to purchase now, rather than paying a significant price for waiting and taking the risk that your health conditions may decline in the interim.

Kersten and Associates 900 Fort Street Mall, Suite 400, Honolulu Hawaii 96813 Phone (808)531-3137 Fax (808)261-2626 kerstenandassociates@live.com

Assumptions: $6,000 monthly benefit, 5% compound inflation annually.

Number of Years that Premiums Are Paid by a 50-Year old		Total Premiums Paid (approximate)	Months of Benefits to Equal Total Premiums Paid

	2	$3,156	1/2 month	monthly benefit = $6,300
	5	$7,890	1 month	monthly benefit = $6,300
	10	$15,780	1 1/2 months	monthly benefit = $9,300
	20	$31,560	2 months	monthly benefit = $15,200

** Based on a national average, a year in a nursing home is estimated to cost $46,000. In some areas it can cost twice as much. The annual premium may increase on a class basis within a state.

The comfort in knowing you have protection offsets the cost of coverage. The numbers show that it makes more sense to purchase now, rather than paying a significant price for waiting and taking the risk that your health conditions may decline in the interim.