Why Apply for Long Term Care Insurance at age 50? The Underwriting Challenge

Long Term Care Buying BasicI have been in the long term care industry a very long time.  In recent years – in recent months even! – I and many other professionals have noticed that long term care underwriting has become progressively more strict.  Two years ago we could still get people covered that Type 2 Diabetes and over 50 units of insulin each day.  No longer.  In fact as of this writing only 2 long term care insurance carriers will even look at someone who is taking insulin.  Give us another few years and that may disappear as well.  That is just one example – there are many…  People who use to not be tested for mental acuity are now tested prior to being approved for long term care insurance.  Carrier’s who use to have only phone interviews are now giving phone AND a face to face interview.  Two carriers have shifted away from current medical records and have gone to a full paramedical exam in the house.

This means that the average age to apply – and get approved! – has dropped.  When I started in this industry many years ago, the average purchase age was in the late 60s.  In the ensuing time, the average purchase age has droped like a rock to the early 50s.

The problem, of course, I that most people in their early 50s are thinking, “I don’t need long term care insurance.  I am not old enough yet.”  But then, that is like saying “my house is fine, I don’t need insurance for it yet.”  Frankly, if you wait till your house is on fire to get insurance, you won’t be successful.  Long term care insurance is the same way.  Sadly, we are all generally in denial of just how good (or bad) our health is.  So we maintain that we are in “pretty good health” because we are better than our neighbor who is our age or better than a friend at church.

Long term care insurance carriers don’t do relative health – they aren’t judging your health against everyone else your age.  They are judging your health against that of someone who has no medical conditions, no Rx and no other problems.  Anything that steps away from “perfect” health is going to get a price increase.  And if you step 2 or 3 steps away from “perfect” you are likely to be declined because you are a house smoldering if not already on fire. This isn’t a judgement about health or medical condition.  Long term care insurance carriers are a business.

When people get annoyed by this (Typically they will say, ‘Well, how can they refuse me?  I mean, don’t’ they see I am going to need this?’), I am a little bemused.  The fact that a person is going to need insurance is a reason any logical company would deny them coverage.  Really?  If you were an car insurance company would you insure a driver who announced up front they were going to be in a wreck in the near future?

Whether we like it or not as consumers, we must at some point come to grips with the fact that long term care insurance carriers are going to manage their risk and take folks who are healthy and have every likelihood of being so for an extended window.  My advice today (which means I can change it in the future!)?  Apply for long term care insurance early.  About age 50 will do nicely.

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