Long-Term Care Insurance Premiums Have Soared in Past Year

Long-term care insurance prices have suddenly skyrocketed by as much as 66 percent in one year, according to the 2021 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group. The price increases apply to couples and single individuals.

A married couple who are both 55 years old would pay an average of $5,025 a year combined for a policy with a 3 percent growth rate for a total of $400,500 of long-term care insurance coverage when they reach age 85. This is a 66 percent rise from 2020, when the association reported that a couple could expect to pay $3,050 for approximately the same level of coverage.

Rates for single men and women have also shot up in 2021. A single 55-year-old man can expect to pay an average of $2,220 a year for $165,000 worth of coverage, up from $1,700 in 2020 for $164,000 worth of coverage, roughly a 30 percent rise. The same policy for a single woman averages $3,700 a year, up from $2,675 in 2020, a 38 percent increase. Overall, women still pay more than men.

This year the association is providing more information on different pricing options. “Covid and the changing economic environment calls for consumers to take a different approach to their long-term care insurance planning,” states Jesse Slome, director of the long-term care insurance organization. “Years ago, the majority of people purchased an option that increased their benefits by five percent yearly,” Slome explains. “As interest rates dropped, this became an expensive option and more consumers started to favor the three percent growth option. However, this too can be costly in today’s historic low interest rate climate.”

The association also reported on the cost of waiting to apply for benefits. Someone who purchases insurance at age 65 will pay 49.9 percent more than if that person had purchased the insurance at age 55.

This year’s index compares policies sold in Illinois and was conducted in January 2021.

For the association’s 2021 index showing average prices for common purchasing scenarios, click here.