Long Term Care Insurance Statistics: October 2014 Update

Long Term Care Insurance Statistics: October 2014 Update

Updated October 2014.

October 2014 Summary: Women account for 2/3 of LTC Claims, and premiums are higher for women in many cases, but not always.

If you’re researching Long Term Care Insurance, one of the first questions you’ll need to answer is, “how much coverage should I buy?”  You’ll also need to determine the best age to buy a plan, and what riders you should add to your plan and which riders you should skip.  All of these decisions are pure guesses on your part, so for many it can be hard to decide what to buy.To help make sense of all the data, we’ve compiled some of the best industry statistics on this page.
Combine what you read here with your own family history and situation, and you should be able to make some better educated guesses as to what is the right amount of coverage.  Finally, consult with a professional who can provide you with many companies quotes.  We have a form on the bottom of this page that will get you comparison quotes from the major LTC insurance providers, of which there are 10-12 (depending on who you ask).
The statistics presented here are culminated from 37 years of Long Term Care Claims, and over 162,700 claims paid between 1974 and 2013.  Our dataset represents over $7.7 billion dollars in benefits paid through the end of 2011, or about $48,000 per claim on average. 

As time goes on and Long Term Care costs rise, we expect all of these statistics to skew much higher.  In fact, everything we see here trend-wise indicates an extreme need for inflation protection (you have options) when you purchase an LTC insurance policy.  Inflation Protection help grow your benefits in pace with inflation, so your benefits don’t lose significant value by the time you need care. After all, most every state from Alabama to Wyoming (PDF) will require you have inflation to qualify for Partnership Benefits.

Your doctor initiates the need for Long Term Care.

Claims by Demographic

  • Ages range from the youngest person to claim, at age 27, to the oldest person (so far) to claim, at the ripe old age of 103!
  • The longest claim so far was 18.7 years, and over $1,200,000  in benefits.  This particular client, according to legend, paid four years premiums before making the claim.

Long Term Care is a Women’s Issue

Consider that 71% of claims dollars are paid to female claimants.  Anyone who’s ever been to visit in a nursing home would think the proportion is higher than that, since women make up around 80% or more of all nursing home residents. Consider, though, that about 75% of claims start at home, when a man may still be alive and partially cared for by his wife and family.

In 2013, the top Long Term Care Insurance companies introduced Gender-Based pricing (Reuters), targeting higher premiums to women, and in particular single women (CNBC), to help adjust to this large disparity in risk.  As of this writing, there are still several companies offering the same rates to men and women, so it may be a good time to inquire while that door is still open.

Daily Statistics: Claims are Being Paid

Most of us have a natural apprehension of insurance companies, but “blue chip” Long Term Care insurers are trustworthy in delivering on their promises.  The largest provider of Long Term Care Insurance pays $4,300,000 in benefits every business day as of April 2012.

The LTC insurance market is made up of about 25 companies that currently sell or sold policies in the past.  Estimates of total daily payout range from $9-$15 million when considering the entire market.  The positive effect that savings has on existing policyholders is substantial, considering the extremely high and ever increasing cost of care, which is part of the reason that sales for Long Term Care Insurance are actually increasing at many of the top insurance companies.

A Dichotomy: Short vs Long Claims Phenomenon

There’s a popular saying in the LTC Insurance industry: “You either have a 100% chance of needing care, or a 0% chance.  And you don’t know until the time comes.”  While there is truth in the statement, it ignores rational thought and statistical analysis.  What cannot be ignored, however, is the division of claims into two distinct groups.

  • Claims that last a year or less.  [Manageable]
  • Claims that last over a year. [Potentially Catastrophic]
When Long Term Care Insurance claims are evaluated over the long-run, 43% of claims were for one year or less.  Shorter claims would be accounted for by things like a short recoverable illness, a sudden terminal illness, and single use of non-caregiving benefits.

If you make it past a year, hang on tight.

Once a claim has lasted for at least a year, it falls into a different category, and becomes potentially catastrophic.  Claimants that break the one-year threshold then experience an average of 3.9 years of care.  Longer claims are accounted for by things such as dementia or Alzheimer’s (nearly 50% of total claims) that tend to go on.  Women are more likely to make these longer claims, yet another reason for the gender-based pricing.

An Alarming Trend Revealed: “Long Tail” Claims are Getting Longer

Statistics collected in the late 90′s indicated that about 95% of claims were in the universe of five years or less, and the conventional wisdom that this is true is widespread.  However, for the 2012 update, we found that the percentage of claims lasting beyond 5 years had tripled to approximately 15%.  Several insurance companies quit offering Unlimited Benefit plans over the last few years for obvious reasons.  In 2012, every single insurance company that offered “Unlimited” long term care coverage pulled that from the market.  There are still companies offering up to ten years of benefit payments, so if you’re concerned about longer claims, mention that to your advisor.

What Protection Are Real Clients Actually Buying?

LTC Tree did a study of 3,730 clients as of May 2012 to see what real-world clients were buying.  The study was conducted on actual plans purchased by clients in 44 states.
  • Benefit Window: Average: 3.57 years purchased, with a median of 3 years, or 1,095 days.
  • Benefit Amount: Average of $155.12/day benefit, with a median of $150/day.
    • Monthly benefits were converted into their daily equivalent for this study.
  • Average Premium: $3,152 (This would be a combined total for married couples.)

When Is the Right Time to Buy Long Term Care Insurance?

The average client in this study was age 53.  Learn more about your ideal age to buy (or shop for) Long Term Care Insurance.

Compare Your Actual Costs

Use our updated Online Calculator to get estimates of what Long Term Care Insurance will cost for you.  Request a specific quote from a licensed agent below.

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