Tue. May 30th, 2023

When it comes to long term care insurance, sooner is better for those weighing the potential for needing such services later in their lives. Much like life insurance plans, long term care insurance policies are more affordable the younger the policyholder is when purchasing the coverage.

But people in their 20s and 30s should wait to purchase such plans. Waiting until they are in their 50s is a perfectly acceptable decision as rates remain affordable at about $75 per month for many plans at that age. Buying when too young means likely paying premiums for a much longer period of time, which adds up to a great deal of money. And most of the causes of long term disabilities among young people typically are covered by other forms of insurance, such as auto insurance in the event of an accident or workers compensation if afflicted while on the job.

But when waiting until age 50 or so, rates remain affordable while the likelihood of suffering some condition causing a need for extended health care becomes more likely. Most people won’t need extended health care services until in their 70s or 80s, with some states reporting age 85 being the average age at which such services become necessary due to failing health.

People who buy long term care insurance at age 55 pay an average of $75,000 in premiums over 10 years to receive more than $800,000 in benefits. But waiting 20 years to buy the same policy results in a $100,000 payment in premiums over 10 years to get only about $300,000 in benefits, which means much more money will be paid for far less in potential benefits. Planning ahead and buying when relatively younger makes a great deal of financial sense.

Another good reason for buying coverage for long term health care when younger is that, unlike health insurance, which now cannot refuse people with pre-existing conditions, insurers can refuse to underwrite coverage for people who have pre-existing health conditions when applying for an extended health care plan. The Affordable Care Act of 2010 only addresses health insurance and not long term care, which initially was to be addressed but was dropped from the legislative package after lawmakers and officials in the Obama administration decided not enough people would participate.

In addition to buying policies when younger, supplementing them with life insurance policies that provide partial coverage for disabilities and other ailments that can lead to a loss of income for periods of time is helpful. Many life insurance plans with the proper riders can be purchased with provisions for collecting part of the benefits if stricken with an extended disability or even a temporary one.

With an estimated 70 percent of all people over age 65 needing extended care services at some point during the remainder of their lives and many retirees living on fixed incomes, planning ahead for extended health care is a wise decision.