Los Angeles, CA - August 5, 2013 The nation's long term care insurance companies are expected to pay $15 billion annually to policyholders a decade from now and more than twice that amount in 2032 when today's 60-year-olds reach their 80s.
"Long term care insurance plays an increasingly important role paying for care needs and protecting retirement plans," declares Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI). The organization released industry claim projections today based on analysis by leading independent actuarial experts.
In 2012, long-term care insurers paid $6.6 Billion in claim payments to some 264,000 individuals according to AALTCI. "By 2032 insurers are expected to pay $34 Billion-a-year in benefits a 415 percent increase," Slome reports. "The quadrupling in benefit payments is the result of aging of policyholders, policy value increases and the continued growth of individuals purchasing protection," Slome explains. "State regulations require insurance companies set aside significant reserves ensuring that today's insurers are prepared to pay increasing claim costs in the future."
The Association study focused on traditional long-term care insurance policies purchased by individuals or offered to employees at the worksite. "Billions more in yearly long-term care benefits will be paid to the growing number of people who are purchasing hybrid products including life insurance policies that offer long term care benefit riders," Slome adds. The Association reports that roughly eight million Americans currently have some form of long-term care insurance protection. Over 320,000 individuals purchased new coverage in 2012, an increase over 2011, according to the 2014 Long-Term Care Insurance Sourcebook published by AALTCI.
"Taxpayer supported government programs like Medicare and Medicaid simply cannot afford to pick up the growing cost for care as today's Baby Boomers reach the age when most long term care is needed," Slome concludes. "Private long-term care insurance will play an increasingly important role providing individuals with choices and options not available elsewhere."
The Association recently issued a report citing the largest long-term care insurance claims paid in 2012. "The largest claim for a female policyholder has reached $1.8 million with the claim lasting nearly 16 years," Slome notes. "The largest claim for a male policyholder has reached $1.3 million." The vast majority of long-term care insurance claims begin after the policyholder reaches age 70 according to Association research.
"A healthy 60-year-old woman today has a 70 percent chance of reaching age 85," Slome says. "If you live a long life, the risk of needing long-term care is enormously high and most people have no plan in place to deal with this reality." The long-term care insurance expert recommends individuals interested in long-term care insurance as an option commence planning in their 50s. "One must health qualify for insurance coverage and health starts to change after age 60," Slome shares.
For more information, visit the American Association for Long-Term Care Insurance's website at www.aaltci.org or call (818) 597-3227.