Insurance is a gamble. That is the nature of all insurance. There are many factors to consider when buying insurance. One factor to consider with long term care insurance is when to buy it. You buy it for a potential future need. Delaying buying a policy will increase your monthly premiums and typically cost you more in the long run.
If you wait until you need long term care you are already too late. Insurance companies will not sell you a policy at that point. Remember insurance is for future need.
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Once your health has become compromised your premiums for a new insurance policy will go up. Insurance companies will raise their premiums by 15% – 75% for a new policy with the same benefits if your health is compromised. There are some preexisting conditions which will preclude insurance companies from offering insurance to individuals.
Long term care costs are currently going up at 3% – 5% per year. This rise means that you will need to buy an additional 3% – 5% more coverage for each year you delay buying a policy. Additionally, insurance companies regularly introduce new products with higher premiums for new applicants.
The older you are the more insurance companies charge for the same level of coverage. Premiums for new policies increase on your birthday. These increases are typically 2% – 4% in your 50s and go up 6% – 8% in your 60s.
The younger and healthier you are, the less expensive premiums are for long term care insurance. For their younger and healthier policy holders, insurance companies are able to collect premiums for a longer period of time thus reducing their own risk. This advantage is passed on to the policy holder resulting in lower cumulative premiums.
The sooner one buys long term care insurance the less one will pay. Discuss with your financial advisor whether long term care insurance is in your best interest.