Save money on long term care insurance by getting a policy before you retire.
For most people, long term care becomes a concern when they get in the proverbial “retirement red zone” in their 50s. Retirement is squarely ahead of them and they are concerned about preserving their retirement assets. As a result, savings and investments become more conservative and long term care insurance is purchased to protect their hard-earned retirement savings.
Many prudent investors appreciate the need to insure against the potentially devastating cost of long term care, yet they hesitate to commit to buying coverage today. It’s a big commitment to make, so it’s easy to make excuses not to buy this valuable asset protection. Perhaps they would rather save the insurance premiums and invest the money. What ever the case, now just doesn’t seem to be the right time.
The problem with this kind of indecision is that it costs money. Lots of money. And unless they can magically earn a guaranteed tax-free 25% or more on their safe money investments year over year for the next thirty years (or win the lottery), there’s no financial advantage in waiting to buy coverage.
Why It’s Better To Buy Long Term Care Insurance Now
The two primary factors that determine the cost of long term care insurance are age and health. Every day you wait to insure, you’re risking the loss of your health or even losing insurability. That’s a huge risk and unfortunately many who wait will become uninsurable, but hopefully that will never happen to you. On the other hand, with absolute certainty you will get older each year and the cost for insurance will corresponding rise. That’s guaranteed.
And the cost for long term care and the insurance that pays for it is going up, up, up. The increased need for long term care with our aging population will strain the current capacity for providing this care. This will put additional inflationary pressure on the cost of long term care and insurance companies will have to adjust their rates up to make up for the funding shortfall in paying for this care. Raised demand and increased utilization along with inflation will push long term care insurance rates higher in the future, it’s just simple math.
In order to keep current policyholders rates level, increased rates are typically applied to new policies, so buying long term care insurance early is essentially purchasing coverage at a discounted future rate that you will have to pay if you decide to wait. Why would you wait to buy something that you know will only cost more in the future?
If you are healthy and at least 50 years old, there is absolutely no financial reason to wait to buy long term care insurance. As we get older, the risk of needing care increases and our chances of being accepted for long term care insurance decreases. All the while the cost of care and insurance both continue to rise. Buying long term care insurance early while you are young and healthy will literally save you tens of thousands of dollars over the life of a policy.
