Long-Term Care Insurance Industry Reports Sales Growth
The number of individuals purchasing long-term care insurance grew by 14 percent in 2010 with some 475,000 Americans purchasing this protection according to a just-published report.
"Despite a difficult economy, people increasingly realize that planning for the risk of living a long life is necessary," states Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the industry's trade organization. According to their just-published industry study, some 8.1 million Americans were protected with long-term care insurance at the end of the year.
Total earned premium for the long-term care insurance industry in 2010 amounted to $11.7 billion with the industry paying out approximately $6.1 billion in claims during the year. "Ten of the leading insurers which includes companies like Genworth, John Hancock, Prudential and Mutual of Omaha paid out $10.8 million in claims every day," Slome explains. "That represented a 53 percent increase over what they paid out just four years ago." The largest claimant has already been paid $1.5 million for a claim that has lasted some 14 years.
The vast majority of individuals purchasing long-term care protection did so prior to retirement, the Association's annual study revealed. More than half (56 percent) of all individual applicants were between the ages of 55 and 64. "People who are waiting until age 65 and finding they can not afford this coverage or may no longer be able to health qualify," Slome adds.
The majority of individuals purchasing coverage paid less than $160-per-month a report in the 2011 Long-Term Care Insurance Sourcebook revealed. Nearly a fourth (25.1 percent) of new buyers under the age of 61 paid less than $1,000 for their coverage in 2010 according to the report. Experts point out that increasingly consumers are insuring only the part of the financial risk they don't want to pay from savings or retirement income.
Married couples continue to comprise the majority of those purchasing individual long-term care insurance with over half (57 percent) of new sales consisting of policies covering both husband and wife. "A number of insurers today offer significant discounts off both policies when both parties apply," Slome explains.
The number of employers offering voluntary coverage to their employees grew during the year the organization reported. Employees opting for this protection tended to be younger and to purchase lower levels of protection the report revealed.
Costs for comparable long-term care insurance revealed a wide spread among the companies offering coverage at the beginning of 2011. The cost for a married couple purchasing $821,500 of protection at age 80 ranged from a low of $2,085-per-year to a high of $3,970 annually. "Each company establishes their own rates, acceptable discounts which makes it extremely important that consumers today compare rates before purchasing," Slome concludes.
Long-term care in the United States is needed by 10.9 million community residents, half of them non-elderly, and 1.8 million nursing home residents according to the 2011 Long-Term Care Insurance Almanac. Total annual spending on long-term care services amounted to $147.4 billion.
Written by Mindy Hartman