Understanding Long Term Care Insurance
Advance Preparation
The Cost
The cost of a long term care insurance policy primarily depends on your age. The older you are when you purchase a policy, the higher your premium. For example, a typical premium for a 50-year-old person for a policy that covers a $100 daily benefit, four years of coverage and includes a five percent compounded inflation protection, is about $850 annually. This same policy for a 65-year-old is about $1,800 annually; for a person aged 79, the cost is about $5,500 annually.
You can control premium costs by controlling the policy amount and options you purchase. Higher daily benefits and optional features, such as inflation protection and nonforfeiture benefits, increase your premium. Studies of the cost of different long term care insurance policies show a three-fold difference from a low-option policy to a high-option policy in every age category. Some companies may not write long term care insurance policies for persons over 85.
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