How Much Does Long Term Care Insurance Cost?
Probably the first question that comes to mind when someone suggests this relatively unknown type of insurance is “How much does long term insurance cost?” Like with almost anything and especially anything in the world of financial products, the answer is, it depends.
Rates vary depending on a variety of factors just like with any type of insurance. Each company is slightly different in their rates, their underwriting requirements and what is included in their policies.
All these factors will make a world of difference to how much you will have to pay for this protection.
Age Matters
Obviously for this type of insurance, the risk of paying out majorly increases with the age of the policyholder; therefore age is a major factor in premium rates. If you take out a policy when you are in your forties of fifties, then you will have much lower rates than if you wait till your late sixties or even seventies.
In addition to it being much easier to afford the lower rates, your company cannot increase your policy because of your health or your advanced age. The only way they can increase it is with an across-the-board class increase in premiums.
Health and Habits
The underwriting requirements will also determine how much you pay. Each company has its own set of guidelines, but be prepared to answer questions about your health and your lifestyle habits, such as if you smoke or have ever smoked. Some companies require a physical or information from your own doctor while others do not.
All long term care insurance providers will ask a minimum number of questions and the ones with looser underwriting requirements will leave it at that, while the ones who are stricter will delve deeper into your health history. Other questions that will help determine rates are if you have had any recent hospitalizations, prior conditions, your marital status and your gender.
Policy Features
As with all insurance, there are a variety of different types of coverage available, and a number of options that can be added to a policy. All of these will make a major difference in how much you pay for your long term care insurance.
When deciding on the type of policy to buy, you will need to look at the elimination period, which is a waiting period before benefits kick in. A shorter or no elimination period will increase the cost of your premium. You also need to decide on how much daily coverage you would need and this often varies depending on care costs in your geographical area. The number of years you would like to be covered also influences your rates. Inflation protection is a wonderful option to make sure your insurance remains sufficient to cover future costs, however it can make as much as more than a 100% difference to your yearly premiums, especially if you are relatively young when you purchase it.
A non-forfeiture clause will also provide you some protection should you reach the point of no longer being able to afford the premiums, however its addition to your policy initially will raise the cost as well.
The Numbers
Long term care insurance rates tend to average about $2,000 per year. However, for a bare bones policy for a forty year old, coverage can be had for under $500 a year. The opposite end of the spectrum, a person in their seventies with high coverage and additional options on their policy can pay upwards to $10,000 yearly.
These numbers vary widely, so educate yourself as you shop for the best possible long term care insurance policy rates.
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