Initial LTCi Claims Skew Heavily Toward Older Ages

Long-term care insurance (LTCi) claims are not filed as early as conventional wisdom would seem, new research indicates.

That may come as a surprise to people who don’t realize that LTCi claims tend to start when claimants are in the 80s and 90s, said Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

Agents sometimes tell policyholders they might need to rely on their LTCi policies before age 80, he added, but that’s generally not the case.

“So first it’s important for agents to understand the numbers,” Slome said.

What the Numbers Show

Here are the key data points from the survey:

• 72.5 percent of new claims were filed by people age 80 or older, with almost half of those filed by people 90 or older.
• 20.5 percent of new claims were opened by policyholders between the ages of 70 and 79.
• 5.5 percent of new claims were started by policyholders between the ages of 60 and 69.
• 1 percent of new claims were initiated by policyholders between the ages of 50 and 59.

The percentages have remained stable for the past four or five years, Slome said.

Since insurers typically stop underwiring LTCi coverage when people reach their mid-70s, it’s important for agents with clients in the market for LTCi to buy a policy while clients are still in their 60s, Slome said.

LTCi policy premiums need time to grow so that when the time finally comes to go on claim the benefits are covered, he said.

About 295,000 individuals were on LTCi claims last year, an increase of 5.3 percent or 15,000 people from 2016.

Claims Begin at Home

The idea that most LTCi claims begin in the nursing home setting is a myth.

The majority of new LTCi claims – 52.1 percent – originate from the policyholder's home. Another 28.2 percent of new claims start in nursing homes and 19.7 percent begin when the claimant lives in assisted living, the association reported.

For people with LTCi coverage who live into their 80s and 90s – as more people are doing due to longevity – chances are they will be filing an LTCi claim, and that those claims will be filed while the policyholder lives at home.

Women accounted for 68 percent of newly opened LTCi claims last year, the association found.

Among female policyholders:

• 34 percent of claims started while the claimant was living at home.
• 19 percent originated from a nursing home.
• 8.5 percent originated from assisted living.

Long-term care insurers last year paid out $9.2 billion in claims, and that number is expected to rise every year as the cost of long-term care also rises.

Over the next decade, LTCi policies are expected to pay out about $100 billion in claims, Slome said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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