The first price index comparing leading linked-benefit long-term care insurance costs and benefits was released this week by the American Association for Long-Term Care Insurance.
“With linked-benefit policies now outselling traditional long-term care insurance, consumers are requesting more meaningful price and benefit information,” said Jesse Slome, AALTCI’s director. “The organization annually reports price information for traditional long-term care insurance.”
Linked-benefit long-term care policies are different from traditional LTC policies, Slome stresses. “Prices vary of course but the more significant difference is the value of future benefits.”
The 2022 Linked Benefit Long-Term Care Price Index reports and compares a combination of premium costs as well as future available long-term care and life insurance payouts.
The analysis reports 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.
Two Examples for a 55-Year-Old Male
Yearly Cost: (A) $6,100/year — (C) $5,235/year
Maximum LTC Benefit at Age 85: (A) $753,627— (C) $568,801
Death benefit (at Age 100): (A) $274,405 — (C) $240,804
Two Examples for a 65-Year-Old Female
Yearly Cost: (A) $13,048/year — (C) $12,368/year
Maximum LTC Benefit at Age 85: (A) $560,796 — (C) $482,400
Death benefit (at Age 100): (A) $456,674 — (C) $456,236
“The future potential benefits can vary from one insurance company’s policy to another,” Slome said. “Selecting the right coverage is a lot more complex than simply looking for the lowest premium cost. And since it almost never pays to drop and replace coverage, making the right initial plan choice is of paramount importance.”
Linked-benefit policies are typically life insurance policies designed to pay a death benefit if none or only some long-term care benefits are paid out. “Here again, the maximum death benefit for someone buying at age 55 varied from a low of $100,000 to as much as $274,405.”
AALTCI’s director stressed the importance of comparing coverage before buying. “With their growing popularity comes a need for increased consumer education,” Slome advises. “We will be spending far more attention on this subject.”
To access the price index information, go to https://www.aaltci.org/linked-benefit-price-index-2022/.