First national study looks at buyers of life and LTC policies

By Jesse Slome

American Association for Long-Term Care Insurance


Nearly half of individuals purchasing asset-based long-term care protection in 2008 were younger than age 65, according to the first national study of buyers. Meanwhile, findings indicate that 66 percent) of purchasers were women and the average single premium paid was $70,975.

At the American Association for Long-Term Care Insurance (AALTCI), we examined 2008 sales data for more than 5,000 new policies. We found that asset-based long term care insurance (LTCI) protection is becoming an increasingly popular way for individuals to protect against the risk. Asset-based long term care policies offer the dual benefit of access to long term care benefits, as well as life insurance protection. Many individuals find this coverage attractive because if they don't use their long term care protection, their beneficiaries still benefit from the life insurance coverage.

The average single premium paid for an asset-based LTCI policy in 2008 was $70,975, according to the study. This represented a 4 percent increase compared to 2007 when the average premium was $68,300. Just less than half of policies (49.7 percent) had a base face amount of between $100,000 and $200,000. Some 30 percent had a face amount of life insurance protection of between $50,000 and $100,000. And the AALTCI says policies offer a long term care insurance protection in multiples of the life insurance benefit.

Purchasers of asset-based LTCI policies were almost equally divided between pre-65 (49 percent) and 65-or-older (51 percent). Slightly more 10 percent (11.2 percent) of purchasers were between ages 45 and 54. Exactly two-thirds of purchasers were women (66 percent). Buyers are older than individuals purchasing traditional long term care insurance protection. According to the Association's study, some 84 percent of buyers of traditional LTCI protection in 2008 were younger than age 65.

Asset-based long term care protection and traditional LTCI policies share the requirement that applicants health qualify for coverage. The percentage of accepted applicants declined with age according to the study's findings. Some 70.2 percent of submitted policy applications by individuals between 45 and 54 were accepted. The percentage declined to 60.5 percent for applicants between ages 65 and 74.

The AALTCI anticipates the market for asset-based long term care protection will increase in the years ahead. Leading insurers such as Genworth Financial and Lincoln Financial Distributors are currently focused on the growth of this market and policy sales. Will your company be next?

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