The Right Age to Buy Long-Term Care Insurance
If you are in your 40s, the last thing you probably think about is long-term care insurance. What if we told you that you should though?
We know, you probably don’t worry about aging quite yet. But, it’s a fact of life – it will happen to you someday. Just like term life insurance, you want to secure protection as early as possible. That early is at an age that you probably are only worried about paying your bills and building a future.
However, the earlier you buy your long-term care insurance; the better off you will be in the end.
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Why Does Age Matter?
There are two reasons age matters when it comes to long-term health insurance:
- Approval rates
First, let’s discuss approval rates. The younger you are, the more likely you are to get approved. According to the Association of Long-Term Care Insurance, only 1% of people younger than age 50 get turned down for long-term care insurance. However, the possibility of denial increases as you age. Almost 1/4th of applicants ages 60-69 get turned down and almost 50% of those ages 70 to 79 get turned down.
Chances are that you are healthier when you are younger. You buy the insurance now, but the likelihood of the insurance company having to pay out is very slim. So they offer you a greatly discounted rate. You get to keep that rate no matter what happens in the future.
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Now, let’s look at cost. Because you are likely healthier in your 40s than you are in your 70s, the cost goes up the older you get. You can expect to pay between 5 and 10% more for every birthday that passes. When you buy long-term care insurance at a young age, the insurer collects your premiums but does not have to pay out for many years. If you buy the insurance at a much older age, the insurance company has a much higher likelihood of needing to pay out soon. In order to make up for this risk, they increase your premiums tremendously.
Even though it sounds strange to start paying premiums now, you have a much higher chance of paying less over your lifetime for long-term care insurance if you start now than if you apply when you are older. Who knows, when you are older, you may not even qualify for the insurance, then you are stuck paying for your care out of your own pocket. The costs for long-term care will almost always cost more than insurance would have cost.
What’s the Magic Age?
So what is the magic age that you should buy long-term care insurance? In general, we recommend 50 years old. However, it depends on your individual health. If you have health issues, the younger you apply, the better your chances of approval. The longer you wait, the less likely it is that an insurance company will insure you at all.
If they do insure you, the cost may be so astronomical that you won’t be able to afford it. As soon as you know you can afford another insurance premium, we recommend that you start shopping around. Every agent has a different program and different requirements. Find the insurance plan that works right for you and lock it in. Even though you probably don’t want to pay the premiums now, you will be glad you did when you need that long-term care.
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