Long Term Care Insurance Characteristics:
WHAT ARE PEOPLE BUYING

March 8, 2012
Parsippany, NJ

Benchmarks. Medians. Averages. All can be seen as guidelines, rules-of-thumb.

Like other professions, long term care insurance planning involves both art and science. The science of understanding policy mechanics, keeping up-to-date on tax incentives, government programs, and planning techniques. The art of being able to take into consideration the hopes and fears of people relative to long term care (LTC). Understanding and working with peoples' propensity to deny the problem. And, perhaps most daunting, considering the reality of their personal situation today while never losing sight of what their situation may be like at age 80 or 90.

Average policy characteristics can sometimes be helpful. They can motivate people to take action, perhaps by validating their own choices. The latest industry-wide in-depth survey yields the information below:

Benefit Period The most popular benefit period was 3 years. Thirteen percent of policies were issued with a lifetime benefit period. Eighty percent of policies were issued with a benefit period of 6 years or less.

Daily Benefit The average maximum daily benefit was reported as about $155.

Elimination Period The vast majority (76.3%) of policies were sold with a 90-100 day facility elimination period. However, 26.6 percent of the policies had a zero-day home care elimination period coupled with a longer facility elimination period.

Premium The average premium for an individual policy was $2,218/year. Keep in mind that this number is inflated by the fact that some policies are sold on a 10-pay, or otherwise limited payment structure, making the premium higher than traditional pay-as-you-go policies. Single-premium policies are not included in calculating the average number.

Other noteworthy facts
The average purchaser is 58 years old. It's interesting to note that 29% of purchasers were age 18-54. Less than 7% of purchasers were over age 70.

Multi-life sales accounted for about 25% of new policies sold. This refers to individual policies sold through employers, associations or other groups, not group policies.

Whether the topic is the practice of financial planning, law, medicine, etc., the best practitioners balance science with art. Knowing the typical policy design may help you as you work with a LTC insurance specialist to craft optimal coverage.

Statistical source: "2011 Individual Long Term Care Insurance Survey," Broker World Magazine, July, 2011. http://www.brokerworldmag.com/ Figures reported pertain to policies sold in 2010.