I am often asked about the best or optimal age to buy long-term care insurance. My answer is that it depends on what you want long-term care insurance to accomplish. If you want to be truly covered against the high costs of long-term care at all times, you should purchase long-term care insurance as soon as (1) you have assets that need to be protected and (2) you can afford the premiums.
It's Never Too Early to Consider Buying Long-Term Care Insurance
It would be wise for even young people to consider purchasing long-term care insurance if they meet these criteria because disability is not limited to age boundaries. It can strike at any age as a result of sports accidents, auto accidents, strokes, brain injuries, etc.
In fact, almost 40% of patients receiving long-term care are under the age of 65. This is a sober warning that we are all at risk for some kind of disabling incident or illness at any point in our lives. It can strike suddenly and without advance notice.
Many financial planners are more concerned with having their clients protect themselves in retirement instead rather than immediately, if they are still working. And it is true that your chances of requiring long-term care services due to aging increase dramatically in retirement years.
Buy Long-Term Care Insurance When Premiums Are Low
So if you are mainly concerned about protecting your assets in retirement, at what age does it make the most economical sense for you to begin seriously considering the purchase of long-term care insurance? I usually recommend somewhere between the ages of 45 and 55. There are two main reasons for this:
- It's reasonably affordable. The premiums for long-term care insurance are about as low as they ever will be during the period between 45 and 55, and rate increases from one year to the next during this period are relatively small.
- Most people usually still enjoy a measure of good health at this stage in life and therefore they can get additional premium discounts for having a good health history. They can lock in these lower premium rates for the remainder of their lives.
After the age of 55, premium costs start to accelerate more rapidly and they increase dramatically from year to year in a person's mid-sixties.
In all cases, the course of financial wisdom is to buy long-term care insurance earlier rather than later.
Until next time…Duane
Duane Lipham is a Certified Long-Term Care (CLTC) consultant.