Bought for $881, this LTC policy pays out $1.7M

Insurance companies paid some $6.6 billion in LTC insurance benefits to about 200,000 policyholders last year, according to the American Association for Long-Term Care Insurance. The group studied claims data from 10 LTC insurers. While many holders of long-term care insurance complain about high premiums, analysis of claims data reveals that a select group of those covered have paid insurers relatively little for what has turned out to be years of benefit payments. According to the AALTCI, the largest open claim is $1.7 million, belonging to a policyholder who bought her coverage at 43 at the cost of $881 per year. The policyholder filed her claim at 46 and has been receiving benefits for close to 15 years. The second-largest claim belongs to a man who bought his coverage at 45, made his claim close to four years later and has been receiving benefits for more than six years. That policyholder paid $3,374 per year for his LTC insurance, which has paid out $1.2 million in claims. In one situation, the buyer made her claim only three months after purchasing coverage. That customer, who was 56 when she decided to buy LTC insurance for $4,520 per year, has been receiving benefits for 12 years and five months. In that time, she has rung up $1.12 million in claims.

"NOT THE LOTTERY'

Often when young insured individuals make claims, it is either due to a debilitating accident or a chronic condition such as Lou Gehrig's disease or multiple sclerosis, said Jesse Slome, executive director of the AALTCI. He added that the study didn't get into details about the specific causes of the largest claims. The AALTCI found that just 10.4% of new individual claims that began last year started before the insured person reached 70. “Long-term-care insurance is not the lottery,” Mr. Slome said. “A policyholder who paid $3,000 in premiums and received benefits exceeding $1.5 million is not a winner,” he said. “But having this protection in place can pay off, and for thousands of Americans, it increasingly [has],” Mr. Slome said. [email protected]