Trends in group long term care insurance

By Jesse Slome

American Association for Long-Term Care Insurance

When it comes to buying long term care insurance protection, there are some significant differences between those purchasing group (employer-sponsored) coverage and those purchasing on an individual basis (typically through an insurance professional).

According to findings of the annual study conducted by the American Association for Long Term Care Insurance, the industry's professional trade organization, group buyers tend to be younger, tend to select longer coverage and also claim against their policy beginning at younger ages. The Association analyzed data on 95,000 buyers of employer-sponsored long term care insurance protection and over 200,000 individual buyers. Some 8.2 million Americans currently have long term care insurance protection and about 400,000 new policies or group certificates are issued annually.

"Individuals continue to purchase protection at younger ages, but that is especially true for those buying coverage in the workplace," explains Jesse Slome, the Association's executive director. In 2008, some 24 percent of buyers purchasing coverage through an employer-sponsored plan were between ages 35 and 44. Another 36 percent were between ages 45 and 54 and 23 percent were between ages 55 and 64. "Buyers in the group marketplace tend to be younger than those purchasing coverage on an individual basis," Slome explains. The Association's study of individual buyers found that 5 percent were between 35 and 44, 24 percent were between 45 and 54 and 53 percent were between ages 55 and 64.

For the first time, the study examined initial premiums paid by employees purchasing protection under a group plan. "One of the biggest misperceptions is that long term care insurance protection is expensive," Slome explains. The Association's study revealed a significant spread between the low and high amounts paid per employee. "For example, for those between ages 45 and 55, the low premium was $430 per year while the high premium was $985." The average for this age band was $690.

The study also looked at claims being paid to those covered by an employer-sponsored long term care insurance coverage. "Because many employer-sponsored plans offer some form of simplified underwriting or even guaranteed issue, we expected to find more people qualifying for benefits at younger ages," Slome notes. Indeed, the Association's research found that 13 percent of new claims opened during 2008 were for individuals less than age 60. "Some 11.5 percent of new group LTC claimants file their claim during the fourth or fifth year of their coverage." The largest open claim under a group plan exceeds $490,000 and the individual has been on claim for over nine years.

The complete findings of the study are published in the 2009 LTCi Sourcebook available from the American Association for Long-Term Care Insurance ( For additional information on ordering the 2009 Sourcebook, contact me using the forum below.

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