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," says Jesse Slome, executive director of the American Association for Long Term Care Insurance. The organization recently released industry claim projections 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 adds. "The quadrupling in benefit payments is the result of aging of policyholders, policy value increases and the continued growth of individuals purchasing protection. State regulations require insurance companies set aside significant reserves ensuring that today's insurers are prepared to pay increasing claim costs in the future."
AALTCI’s study focused on traditional LTCI 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 says. The association reports that roughly eight million Americans currently have some form of LTCI 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 LTCI 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 LTCI claims begin after the policyholder reaches age 70, according to the association’s 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."
For more information, visit www.aaltci.org or call 818-597-3227.
By Ayo Mseka