When to Buy Long Term Care Insurance for the Best Value
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But if you live in New Jersey and wait until age 70 to purchase a policy that pays $250 a day for a private room in a nursing home for up to two years, your monthly premium will more than double (about 130 percent of the bill for someone buying at age 50), according to Genworth's long-term care cost calculator. In this example, if a man alone got a policy at age 50, then the premium to receive $182,500 in covered benefits for a claim at 79 — the average age for filing a claim, according to the long-term care insurance group — would be $56,278, based on a monthly premium of $161.72. Waiting until 70 would mean a monthly premium of $370.88. A woman pays more every step of the way when she's not part of a couple — as little as $43 more a month at age 50 and as much as $145 more at 70. Rates for couples of the same age, no matter what gender, are less than double for the man alone. Entertainment $3 off popcorn and soft drink combos See more Entertainment offers > "If your health is OK and you don't have hereditary problems that insurance companies don't like, the ideal time to get long-term care insurance would be in your early 60s,” says Diahann Lassus, cofounder of New Providence, New Jersey–based wealth management firm Lassus Wherley. Why? You're not too young and you're not too old. A still-affordable monthly premium coupled with a total premium savings is a winning combination. If the single man in New Jersey buys a long-term care policy at 60 rather than at 50, the monthly premium will increase by just $35 a month, but he'll save $11,540 in premiums through age 79, according to Genworth's cost calculator. If he waits until 65, the monthly premium will tick up to $239.20, but he'll save an additional $4,552 on total premiums.
"By waiting, you are betting that you will stay healthy,” says Michael Foguth, founder and president of Foguth Financial Group in Brighton, Michigan. “It's a calculated risk." Be aware: Long-term care insurance premiums can increase over years. But an insurer must get approval from a state's regulators to raise the premium, something that doesn't happen with homeowner's insurance. Long-term care insurers have been imposing significant rate hikes for nearly a decade, and the number of insurers offering this type of coverage has shrunk.
Buy Long-Term Care Insurance at the Right Age to Get the Best Value
Balance benefits risks and costs then decide
E+/ GETTY IMAGES Being slammed with exorbitant bills for a nursing home stay is among the biggest potential budget busters in retirement. That's why getting insurance to cover a chunk of the costs for in-home care, an assisted living facility or a private room in a nursing home is a personal finance move to consider. The key, though, is getting the most bang for your insurance premium bucks. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. The catch? The price of . The national median daily cost for a private bed in a nursing home in 2019 was $280 a day, or $102,200 a year — up nearly 2 percent from a year ago, according to insurance company Genworth's 2019 cost of care survey. A yearlong stay in your own room at an assisted living facility runs $48,612. Those are big numbers that can eat through a retirement nest egg quickly. The average 401(k) balance was $105,200 at the end of September 2019, according to Fidelity Investments.What s the sweet spot
So what's the right age to buy a long-term care policy that keeps premiums affordable while saving you money on total premiums paid over the life of the policy? Sure, you could get a policy with a lower premium in your 40s or when you turn 50. But you'll likely be paying premiums for more than two decades before you file a claim.Shopping for long-term care insurance
Long-term care insurance premiums are cheaper at a younger age. But shopping for a policy between 60 and 65, starting at age 55 for couples, may get you the best combination of monthly affordability and fewer total dollars spent. People older than 70 file more than 95 percent of long-term care insurance claims, and nearly 7 in 10 claims are filed after age 81, the American Association for Long-Term Care Insurance reports.But if you live in New Jersey and wait until age 70 to purchase a policy that pays $250 a day for a private room in a nursing home for up to two years, your monthly premium will more than double (about 130 percent of the bill for someone buying at age 50), according to Genworth's long-term care cost calculator. In this example, if a man alone got a policy at age 50, then the premium to receive $182,500 in covered benefits for a claim at 79 — the average age for filing a claim, according to the long-term care insurance group — would be $56,278, based on a monthly premium of $161.72. Waiting until 70 would mean a monthly premium of $370.88. A woman pays more every step of the way when she's not part of a couple — as little as $43 more a month at age 50 and as much as $145 more at 70. Rates for couples of the same age, no matter what gender, are less than double for the man alone. Entertainment $3 off popcorn and soft drink combos See more Entertainment offers > "If your health is OK and you don't have hereditary problems that insurance companies don't like, the ideal time to get long-term care insurance would be in your early 60s,” says Diahann Lassus, cofounder of New Providence, New Jersey–based wealth management firm Lassus Wherley. Why? You're not too young and you're not too old. A still-affordable monthly premium coupled with a total premium savings is a winning combination. If the single man in New Jersey buys a long-term care policy at 60 rather than at 50, the monthly premium will increase by just $35 a month, but he'll save $11,540 in premiums through age 79, according to Genworth's cost calculator. If he waits until 65, the monthly premium will tick up to $239.20, but he'll save an additional $4,552 on total premiums.
"By waiting, you are betting that you will stay healthy,” says Michael Foguth, founder and president of Foguth Financial Group in Brighton, Michigan. “It's a calculated risk." Be aware: Long-term care insurance premiums can increase over years. But an insurer must get approval from a state's regulators to raise the premium, something that doesn't happen with homeowner's insurance. Long-term care insurers have been imposing significant rate hikes for nearly a decade, and the number of insurers offering this type of coverage has shrunk.