So much of the information found online that pertains to long-term care insurance planning is old, outdated and frankly quite irrelevant. That is especially true if you are what I refer to as an older woman on her own. That’s someone who is in her late 50s or older, is currently single, divorced or widowed. Perhaps worst of all, little of the information offers valuable insights into ways to reduce the cost of this important form of future protection.
Women on their own have a special need to consider long-term care planning. Note that I have not said long-term care insurance here – just emphasized the planning aspect. Here’s why.
First, it’s a commonly known fact that women are far more likely to live long lives. The latest life expectancy for women is 84 (2018 statistic). But this actually is a bit misleading. A woman turning 65 today can expect to live, on average, until 86.7. Reach your 80s and you have an increased chance of reaching 90, 100 or even older.
Living a long life brings a variety of consequences. Perhaps the greatest is the very real risk of needing long-term care services at some point towards the end of your life.
The second reason women on their own face a very real need to plan is that unlike their counterparts who are married or have partners, women on their own do not have what many refer to as that built-in caregiver. Contrary to what most people associate with the term long-term care, most care is provided in the home setting, and much of it can be provided by the spouse or partner.
So, for older women on their own, undertaking some long-term care planning is essential. But that planning today can be misleading when one bases their decision on older data and information.
According to AALTCI, the national industry trade organization, here are some current facts that women should be aware of.
Women have a far greater need for long-term care services. Some 68 percent of all long-term care insurance policy claims are made by women.
Over one-third of long-term care insurance claims made by women are for services received in their own home. Only 20 percent are for care in a skilled nursing facility.
Because women are more likely to need long-term care and make more claims than men, women pay more for comparable long-term care insurance policies, often as much as 40 percent more.
For all of these reasons, women would benefit from taking a somewhat different approach when considering long-term care insurance. Different from what many refer to as the ‘off the shelf’ product recommendation ne typically is presented. This describes the following basic policy provisions, a starting $150-per-day benefit amount, a 3-year policy provision coupled with a three percent annual growth of benefits to keep pace with inflation.
For the women on their own, some long-term care insurance protection is always going to be better than having none at all. Having some will provide faster access to care, greater options in terms of selecting caregivers and care options. By some insurance, we mean having insurance to pay a portion of the cost using retirement savings and Social Security or other retirement income as the supplement.
An analysis of long-term care insurance prices conducted in January 2019 found that the off-the-shelf approach for a single woman age 60 would cost nearly $3,000 a year. A price many women on their own with fixed incomes simply cannot afford or choose not to afford. Thus they go without any plan.
Rather, here are two more affordable options worth considering. A policy priced with an initial monthly benefit of $3,500 growing at three percent annually with a benefit that grows from an initial $84,000 at age 60 to $198,000 at age 90. This can be a significant amount of insurance benefits to cover home care and certainly many months if skilled nursing home care is needed. The annual premium cost would be $1,800-per-year. This amounts to a 40 percent yearly savings and an amount of coverage that may well suffice for many women and certainly will be better than having no coverage at all.
Or, consider a larger pool of benefits that begins at $175,000 at age 60 and grows to $265,000 at age 90 thanks to an annual 1.5 percent inflation growth option. That benefit will still cost less than $2,150 per year — a 28 percent savings compared to the off-the-shelf approach..
The bottom line for women on their own is to consider far more than the off the shelf approach to buying a long-term care insurance policy. You have a right to request multiple examples of policy illustrations and pricing from the insurance professional you work with. Ask them to propose a Good-Better-and Best scenario with low, medium and higher monthly premium costs.
At the end of the day, armed with this information, you will be capable of making a better-informed decision that will benefit you today as well as your future.