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

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.