The cost for certain long-term care insurance policy designs has not changed significantly over the past five years according to the American Association for Long-Term Care Insurance (AALTCI).
“For men, rates actually may have declined slightly from where they were five years ago,” said Jesse Slome, director of the long-term care insurance organization. “Policy costs for women are about the same until you add an inflation growth option—then there is a significant increase.”
The analysis is based on a comparison of the Association’s annual long-term care insurance Price Index data.
“In 2016, a 55-year-old male would pay $1,015 annually for a policy that provided $164,000 in long-term care benefits,” Slome said. “According to the 2021 Price Index, a 55-year-old male would pay $950 yearly for the same level of coverage. Adding the 3% compound inflation option did not dramatically increase what a male would pay for coverage.”
Policy costs 2016-2021 for women
The same is not true for single women, according to AALTCI data.
“Women account for the vast majority of long-term care insurance claims so it’s to be expected that costs for their coverage would be higher,” Slome noted. “Policy benefits that are guaranteed to grow by 3% annually are going to cost more because we are in such a low interest rate environment.”
According to the 2016 AALTCI Long-Term Care Insurance Price Index a woman age 55 would have paid $2,580 for $164,000 of immediate benefits growing to $400,000 at age 85 that year. In 2021, the Association reports coverage with the inflation growth option will cost $3,700 annually at the time of purchase.
Costs for policies with no inflation growth option cost more for women (than men) BUT the costs have NOT increased over the five-year period.
“As interest rates drop, insurers need to charge more for a policy that is designed to grow,” Slome said. “However, today, women can find policies that will grow at 1% or 2% annually and those will cost less than one growing at 3% yearly.”
The Association gathers data each year for common levels of long-term care insurance being purchased by consumers.
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of planning and supports insurance professionals who market both traditional and hybrid LTC solutions.