Alert
Close

Help Decide the Future of Aging. Join the White House’s Live Stream From Cleveland Monday. Learn more

Highlights

Close

 

Contests and
Sweeps

You Could Choose Your Dream Vacation!

Hawaii, the Grand Canyon or an Alaskan Cruise! No purchase necessary. Ends May 31. See official rules.

Free Fun!

AARP Games - Play Now!

PROGRAMS & resources

Best Employers for Workers Over 50

Check out the winners list and latest news about this AARP recognition program.

Employer Resource Center

Attract and retain top talent in a changing workforce.

Your Own Business

Information for business owners, entrepreneurs and the self-employed.

webinars

Learn From the Experts

Sign up now for an upcoming webinar or find materials from a past session. 

Most Popular
Articles

Viewed

Financially Speaking

Prices Rise for Long-Term Care Insurance

But without it, families may face extremely high bills

En español | Long-term care insurance is becoming a luxury buy. The middle class increasingly finds itself priced out of that market as premium costs rise, not only for individual coverage but for many group policies, too. The number of new individual buyers dropped by 43 percent between 2004 and 2009 and has recovered only slightly since, reports LIMRA, a group that provides insurance research.

See also: How risky are reverse mortgages?

So, should you stretch your budget to own a policy? Can you afford not to?

A good long-term care (LTC) policy helps pay for personal care if you can't manage by yourself. It should cover services at home or adult day care, assisted living facilities and nursing homes. Many employers offer group LTC insurance at your expense and with no medical exam. Individual policies cost more and are sold only to people in reasonably good health.

Prices going up and up

Your pocketbook also has to be in good health. For people 55 to 65, prices for new policies are up an average of 30 to 50 percent compared with five years ago, says Jesse Slome of the American Association for Long-Term Care Insurance. A single person, age 55 and in "standard" health, would pay an average of $2,000 a year for a policy with middling benefits. A couple at 65 might pay $5,000. Many insurers are raising prices on existing policies, too.

This cost uncertainty reveals an industry in turmoil. Insurance companies are paying more claims than expected because people tend not to let their policies lapse. Better medical care extends the lives of the chronically ill. Low interest rates have slashed the returns that insurers get from their investments. In the past five years, at least 14 companies quit selling new individual LTC policies, LIMRA reports, and seven dropped out of the employee-group business. They still service those policies but can raise rates.

Long-Term Care Hikes: Rates going up, up, up.

Rates for long-term care insurance are rising. — Photo by Getty Images

Insurers are not allowed to hike premiums on particular individuals but can go after policies by type. For example, take policies with inflation protection that raise benefits by 5 percent a year. That's great for you — the increase just about matches the five-year average increase in national nursing home and assisted living costs. But it's costly for insurers. Some might let you avoid a price hike if you'll reduce your inflation protection to only 2.7 percent a year.

Some policyholders give up. AARP recently heard from a 90-year-old whose premiums had soared by almost 200 percent over the past eight years. This year, she had to let the policy lapse.

Next: Don't forget to read the fine print. »

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS Store membership discount aarp benefits

Members save 15% on eligible products/services, 5% on UPS shipping at The UPS Store®.

membership adt

Small business owners save 20% on new installation of any new ADT security system.

Woman holding smartphone in city, Google map tool

Members can find discounts on the go via the AARP® Member Advantages Offer Finder mobile app.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Advance your skills. Transform your career.

Explore your learning possibilities.