About 75 percent of people aged 65 or older will need to take advantage of long term care services, regardless of their race or economic background. Unfortunately, it seems only certain members of the population are taking advantage of the one thing that could best help them prepare for a long term care event — long term care insurance.
According to a new study by the Urban Institute, 10.7 percent (4.8 million) of adults aged 55 and older had long term care insurance coverage in 2008. While that percentage is small, it's nothing compared to the number of minorities with coverage; only 3 percent of Africans Americans and 2.4 percent of Hispanics in the same age bracket had private LTCI.
Coverage rates increased with income; for those with an annual income of $100,000 or more, 19.3 percent had coverage.
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While these numbers fall far short of the ideal, the study did show that participation in LTCI plans is growing. In 2002, 9.1 percent of Americans aged 55 and older held private LTCI coverage.
Considering that the cost of long term care is staggering, LTCI can be a valuable part of a client's or prospect's retirement package. According to a recent LTC study by John Hancock, the national average annual cost of long term care in the U.S. is $85,775 for a private room in a nursing home; $75,555 for a semi-private room in a nursing home; and $39,240 for an assisted living facility. The average cost of care received at home was roughly $20 per hour.
The American Association for Long-Term Care Insurance reports that sales of LTCI policies in 2010 were up, with purchasers generally favoring limited duration policies; data gathered on 153,000 new policies showed that 57 percent of purchasers selected policies with a benefit period of four years or less. That represents a 5 percentage point increase from 2008, when 52 percent of policies purchased were limited duration policies.
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