Bought for $881, this LTCI policy's paid out $1.7M

Though few people are thrilled about jaw-dropping premiums for long-term-care insurance, the clients with the highest claims in the nation are darn lucky they had the coverage. Insurance companies shelled out some $6.6 billion in LTCI benefits to about 200,000 people in 2011, according to the American Association for Long-Term-Care Insurance. The group studied claims data from 10 LTCI carriers. A handful of last year's claims belonged to customers who have managed to rack up the most costly benefits payments for such coverage — and were still being paid as of the end of 2011. 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. Just a few years later, the customer made 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 customer shelled out $3,374 per year for his LTC insurance. In one situation, the buyer went on claim only three months after purchasing her coverage. This customer, who was only 56 when she decided to buy LTCI for $4,520 per year, has been on claim for 12 years and five months. In that time, she's managed to ring up $1.12 million in claims. Often when young insureds make claims, it's either due to a debilitating accident, or a chronic condition like Lou Gehrig's disease or multiple sclerosis, said Jesse Slome, executive director of the AALTCI. He added that the group didn't get the specific details behind the causes of the largest claims. The AALTCI found that only 10.4% of new individual claims that began in 2011 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. But having this protection in place can pay off, and for thousands of Americans, it increasingly is.”