Long-term care claim benefits paid by insurers rose 6.4 percent from 2016 to 2017, with to $9.2 billion in claims paid, the American Association for Long-Term Care Insurance (AALTCI) reported Wednesday.
About 295,000 individuals were on long-term care claims last year. That represents an increase of 5.4 percent, or 15,000 people, compared with 2016, AALTCI also reported.
“The total of all benefits paid increased as did the number of long-term care insurance policyholders on claim,” Jesse Slome, AALTCI executive director, in a news release
The total value of the claim benefits is likely higher than the $9.2 billion reported since thousands of individuals who own linked-benefit life insurance or annuity policies also receive long-term care benefits, Slome said.
LTCi policies help families defray the cost of long-term care, which can easily run more than $50,000 a year in many places.
“Without insurance to pay some or all of the cost, the caregiving responsibility often falls on elderly spouses or adult children caring for their aging parents," Slome said.
The number of lives insured through in-force LTCi policies has plateaued at about 7.2 million, with the average value of claims reserves being established at $119,000, according to a study of the long-term care market by The Center for Insurance Policy and Research using 2014 data.
Price Index Falls for Some, Rises for Others
Prices for some long-term care policies have gone up for some people, but down for others the 2018 National Long-Term Price Index reported earlier this month.
The AALTCI publishes the index.
A 60-year-old couple buying new LTCi coverage can expect to pay an average of $3,490 in annual premium for top shelf LTCi coverage. That average premium is 8 percent lower than last year's average, the index found.
The lower rate was due to fewer long-term care insurers participating in the survey, however, not because of lower prices for long-term care services.
Prices rose for 55-year-old individuals, the survey found.
A 55-year-old woman would pay $2,956 in annual premium in 2018 for a policy with a 3 percent compound annual inflation growth factor and a three-year initial benefit worth $164,000. That same coverage would cost $2,600 in 2017, the index found.
A 55-year-old man would pay $1,870 in annual premium in 2018 for the same policy compared with $1,665 in 2017.
A couple age 55 would pay an annual premium of $3,000 and a couple age 65 would pay an annual premium of $4,675.
LTCi policies are unique in that they may not begin to pay out claims until 30 years or more after they are purchased.
A 2 percent yearly increase in long-term care costs means today’s costs will be 61 percent higher in 25 years and 78 percent higher in 30 years, Slome said.
A 3 percent annual increase in long-term care costs means that someone age 60 will face costs that are 103 percent higher when they reach 85.
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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