Last Updated 10/5/2020
Issue: The long-term care insurance (LTCI) market has evolved significantly since the introduction of LTCI in the 1960s. In the past decade, the market has grown from covering fewer than three million lives to now covering approximately seven million lives. According to the U.S. Department of Health and Human Services (HHS), about 12 million of America’s senior citizens will require long-term care by 2020.
Despite the growing need, the number of insurers offering LTCI coverage has decreased from slightly over 100 in 2004 to about a dozen in 2018. Additionally, premium rates for newly-issued policies have risen as the remaining writers have refined their pricing.
LTCI policies incorporate a number of long-term care (LTC) service alternatives, including home health care, respite care, hospice care, personal care in the home, services provided in assisted living facilities, adult day care centers and other community facilities. Public programs, such as Medicare and Medicaid, also cover certain limited LTC services. As our population ages, the need for LTC support and services will increase and require innovative new approaches. More on this topic and other issues related to the aging population can be found in the presentation videos for the CIPR’s June 16, 2015 symposium, Boom or Bust? A Look into Retirement Issues Facing Baby Boomers.
The decision to purchase LTCI and the premium charged may be influenced by one’s age and life expectancy, gender, family situation, health status, income and assets.
- Age and Life Expectancy: The younger you are when you purchase an LTCI policy, the lower your premiums will be. The longer one lives, the more likely the need for LTC.
- Gender: Women are more likely to need LTC, because, on average, they have longer life expectancies than men.
- Family Situation: If a family member is not available to provide care, paid care, provided inside or outside the home, may be the only alternative.
- Health Status: A family history of chronic or debilitating health conditions could indicate a greater probability of requiring LTC in the future.
- Income and Assets: An LTCI policy may be used to protect accumulated assets. Some experts recommend LTCI premiums should not exceed five percent of income.