Evaluating the Case for Long-Term Care Insurance at 70
For many seniors, the prospect of needing long-term care—and the high costs associated with it—is a major concern. At age 70, the decision to purchase long-term care (LTC) insurance is nuanced, involving a careful balance of potential benefits and significant drawbacks. Unlike younger applicants, those in their 70s face higher premiums, stricter health qualifications, and a reduced selection of policy options. However, for those with sufficient health and assets to protect, a policy can still be a strategic financial move.
The Pros of Buying LTC Insurance in Your 70s
Even with higher costs, there are compelling reasons why purchasing long-term care insurance can be beneficial later in life.
- Asset Protection: Long-term care expenses can quickly deplete a lifetime of savings. With annual costs for a nursing home private room exceeding $100,000 in some areas, a policy can prevent your retirement funds and other assets from being wiped out by a lengthy care event. This is especially important for those who wish to leave an inheritance for their family.
- Control and Choice of Care: LTC insurance offers flexibility in choosing where you receive care—whether in your own home, an assisted living facility, or a skilled nursing home. This autonomy contrasts with the limited choices often available through state-funded programs like Medicaid, which require significant asset spend-down for eligibility.
- Reduced Family Burden: Needing care places a substantial physical, emotional, and financial strain on family members who might otherwise act as informal caregivers. A policy can help fund professional care, providing relief for your loved ones and ensuring you receive consistent, high-quality assistance.
The Cons of Buying LTC Insurance at 70
It is equally important to be realistic about the challenges of obtaining LTC insurance as a senior.
- Higher Premiums: This is the most significant deterrent. The cost of a policy rises substantially with age, reflecting the shorter time frame before a claim is likely. For instance, a 70-year-old could pay thousands of dollars more per year for the same coverage as someone who purchased a policy in their 50s.
- Underwriting and Health Concerns: Insurers conduct rigorous medical underwriting for LTC policies. At 70, the risk of having disqualifying pre-existing conditions is much higher. Some studies suggest a significant percentage of applicants in their 70s are denied coverage, making it a real possibility that you might not qualify.
- Risk of Premium Hikes: Unlike hybrid policies with guaranteed premiums, traditional LTC policies are subject to rate increases over time. This means your initially expensive premiums could become even more unaffordable, especially for those on a fixed retirement income.
- Use-It-or-Lose-It Aspect: With a traditional policy, if you never require long-term care, the premiums you paid are not returned. This is a gamble some retirees are unwilling to take, particularly given the high cost at this age.
Understanding the Underwriting Process for Seniors
The medical underwriting process for a 70-year-old applicant is comprehensive and can be a barrier to obtaining coverage. You should be prepared for the following:
- Application and Medical Questionnaire: You will complete a detailed application covering your medical history, current health, and family health history.
- Medical Records Review: The insurer will request and review records from your primary care physician and any specialists you've seen in recent years.
- Phone Interview or Assessment: A phone interview is standard and may include a basic cognitive exam. For older applicants, an in-person assessment by a nurse may be required to review health, medications, and mental acuity.
- Prescription Drug Screen: An insurer will review your prescription drug history to identify potential pre-existing conditions that you may have omitted or that are associated with higher risk.
Alternatives to Consider at Age 70
If traditional LTC insurance is too expensive or you don't qualify, several other strategies exist for funding future care.
- Self-Funding from Savings: If you have substantial assets, you might be in a position to self-insure. This provides maximum flexibility and avoids insurance premiums, but it requires careful financial planning to ensure you don't deplete your resources.
- Hybrid Life/LTC Policies: These products combine a life insurance policy with a long-term care rider. If you need care, you can draw from the death benefit to cover costs. If you don't use the benefit, your beneficiaries still receive the death benefit. These often have guaranteed premiums, making them a predictable option.
- LTC Annuities: These financial products can be purchased with a lump sum and provide a guaranteed income stream, along with enhanced benefits if you require long-term care.
- Leveraging Home Equity: A home equity conversion mortgage (HECM), or reverse mortgage, can provide funds for long-term care by tapping into your home's value. However, this has complex implications for your estate.
Comparison: Traditional vs. Hybrid LTC Policies
| Feature | Traditional LTC Insurance | Hybrid Life/LTC Policy |
|---|---|---|
| Premium Cost at 70 | High and can increase over time. | Higher initial cost, but premiums are typically guaranteed not to increase. |
| Coverage | Provides a pool of money specifically for long-term care expenses. | Combines a life insurance death benefit with long-term care coverage. |
| Investment Return | No return if you never use the benefits. | If LTC benefits are not used, beneficiaries receive the death benefit. |
| Medical Underwriting | Strict; can be difficult to qualify, especially with pre-existing conditions. | Often less stringent underwriting, but can vary by insurer. |
| Eligibility Risk | High risk of denial due to age and health status. | Lower risk of losing the entire investment if declined for traditional coverage. |
How to Make the Right Decision
Making a final decision involves a holistic look at your personal circumstances. Start with these steps:
- Assess Your Health: Be realistic about your current health status and family medical history. This will be the single most significant factor in qualifying for and pricing a policy.
- Review Your Finances: Examine your savings, assets, and retirement income. Determine if you can comfortably afford the high premiums at your current age and whether self-insuring is a viable alternative.
- Consider Your Preferences: Think about your long-term care goals. Do you want to age at home, or are you comfortable with a facility? Your preferences will help define the type of coverage you need.
- Consult an Independent Financial Advisor: A certified financial professional can provide personalized recommendations based on your financial situation and help you navigate complex policy details and alternatives.
For more detailed information on government resources and the basics of long-term care, the Administration for Community Living offers a valuable resource: ACL.gov: What is Long-term Care Insurance?
Conclusion: Is It Right for You?
Ultimately, the question of whether to buy long-term care insurance at 70 does not have a single answer. While the cost is higher and the underwriting is stricter, it can provide crucial asset protection and peace of mind for those who qualify. For others, alternatives like self-funding or hybrid policies may be more appropriate. Your decision should be based on a careful, honest assessment of your financial health, physical health, and priorities for the future. By taking the time to explore your options now, you can make an informed choice that best secures your healthy aging journey.
