At what age should you buy long-term care insurance?

The specter of having a severe illness or injury that requires long-term care is a scary proposition for most anybody, not to mention the financial obligations you would face.

But trying to time when the best age is to purchase a policy is not an easy decision. Obviously, you don't want to buy the policy too early and unnecessarily spend thousands of dollars on premium over your life for coverage you may not need until you are much older.
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The younger you are when you buy a policy, the lower your premiums. That said, people typically do not purchase long-term care policies in their 30s or 40s since they are looking at a long time-horizon for when they would need to file a claim. After all, the policy may not be needed for 30 years or more.

At the same time, if you wait until you are in your late 60s or early 70s, the premiums may be cost-prohibitive for you - not to mention you may have trouble finding an insurer willing to write your policy.

For example, based on the "Genworth 2019 Cost of Care Survey," if purchased today, a long-term care policy with a maximum daily benefit of $150 a day for three years would cost an estimated:

• $2,004 a year for a man who is 55
• $2,846 a year for a man who is 65
• $9,603 a year for a man who is 75.

As you can see, the ideal time cost-wise is probably in your 50s and 60s.

But before pulling the trigger, you should think about how the premiums fit into your life and other obligations. If you have children who have not yet graduated from college, they will be your major concern. You should carry enough life insurance to see them through.

But after your children are on their own, you might take the funds you were using to pay for life insurance premiums and use them to finance long-term care insurance premiums instead.

Long-term care insurance covers:

• Nursing home care
• Assisted living facilities
• Adult day care services
• In-home care
• Home modification
• Care coordination

When shopping for a policy, you will have many choices to make.

The trigger - Policies will have a trigger for when payments can commence. Often, policies base qualification on cognitive impairment or the need for assistance in at least two activities of daily living (dressing, toileting, eating, transferring, bathing, and continence).

Inflation riders - As you know, health care inflation is never-ending. While $150 may be sufficient to cover your cost of care today, that may not be the case in a decade or 20 years from now.

With long-term care insurance, you often have the option to buy an inflation rider with the policy, which will increase the allowance for daily benefits by a certain percentage a year, like 5% on a flat or compound basis.

But, you need to know that this type of rider comes with a price in increasing premiums. Some experts recommend that buyers under age 70 purchase an inflation rider, while anybody older than 70 does not need to do so.

Elimination period - The elimination period is the time the insured must wait before the policy starts paying out. During that period of waiting, you will be on the hook for long-term care expenses.

Typically, the waiting period is anywhere from one to 90 days, but it could be even longer.

The longer the elimination period, the lower the premium. That said, the premium savings you achieve by choosing a longer elimination period may not be worth it for you.

Don't fall into the disclosure trap

One thing you have to be very careful about when applying for long-term care insurance is full disclosure about your pre-existing conditions or prior illnesses.

If you fail to tell the insurer about an illness, the company may refuse you coverage at the time you file for benefits. It's in your best interest to be up front about your health, as you would rather be denied during the application process than have your claim denied after paying your premiums for years.