Old-age question: Are LTC policies good deals for younger clients?

Number of people under 45 who buy long-term-care insurance is on the rise; cheap premiums

Sep 6, 2012 @ 3:43 pm

By Liz Skinner

Advisers know full well that only a small percentage of long-term-care policies are sold to people under 45. But what they may not know is that when those contracts are tapped at a young age, the benefits can be substantial.

About 3.5% of those who purchased individual LTC plans last year were 44 or under, according to data from the American Association for Long-Term Care Insurance.

The youngest claimant purchased his policy when he was 21 and began receiving benefits three years later. He has received payments for seven years, the association said. The youngest woman bought coverage at 28 and later that year began receiving benefits, which have added up to more than $135,000, the industry group said.

"The number of younger individuals purchasing long-term-care insurance on an individual basis and through their employer is growing," says Tim Kneeland, president of Transamerica Life Insurance Co., an LTC insurer.

In fact, the average age of the 337,000 Americans who bought LTC insurance last year was about 57, compared with 67 a decade ago, according to Jesse Slome, executive director of the association.

About 11.5% of those buying the insurance through a group, typically their employer, were under 45 last year, the association said.

But LTC insurance is a tough sale with young people who tend to believe that the accidents or diseases that could cause someone to require such a policy aren't going to happen to them.

“LTC is not at the top of anybody's list under age 50,” said financial adviser Leslie Knudsen of Knudsen & Associates Inc. “I think it's good to have, but not affordable unless you're buying it in the workplace.”

An LTC policy that offers $164,000 in immediate benefits, and has an option to increase coverage in future years, costs about $635 a year for a 25-year-old, according to the industry group.


What do you think?

View comments

Recommended for you

Featured video


How would your client service change if you had one client?

Too often, advisers are focused on scale and growth instead of their clients. Adviser Barry Glassman explains what advisers can do to stand out in a crowded industry.

Latest news & opinion

Step one: Withdraw from the broker protocol

Pulling out of the protocol proved to be one part of multipronged strategies by Morgan Stanley and UBS to reduce broker attrition. So far, their plans seem to be working.

11 best islands in the world to retire to

International Living has come up with a list of affordable islands around the world.

SEC tests show investors don't understand disclosure form for brokers, advisers

Investor advocates: Agency still has a lot of work to do on Form CRS

Wells Fargo considering sale of retirement-plan unit

The business could fetch as much as $1 billion, sources say.

Employees can now save in a 401(k) by using a credit card

EvoShare provides workers with credit-card perks in the form of contributions to a retirement plan.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print