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Costs of Long-Term Care Insurance Policies On the Rise - What Can You Do to Keep Your Costs More Stable?

ltc insurance.PNGA couple who are both age 60 and who purchase new long-term care insurance coverage can expect to pay between 6 and 9 percent more compared to a year ago according to the 2017 Long Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group. But rates for single men and women remained fairly level or, in some instances, actually declined compared to 2016, reports the association.

A married couple both age 60 would pay $2,200 a year combined for a total of $328,000 of long-term care insurance coverage. This represents a 9 percent increase from 2016, when the association reported that a couple could expect to pay $2,010. Adding an inflation growth option that builds the couple's benefit pool to a combined $660,000 at age 85 would cost an average of $3,790 a year, 6 percent higher than last year.

Rates for single men and women remained fairly level or, in some instances, went down compared to 2016. A single man could expect to pay an average of $1,050 a year for $164,000 worth of coverage, a 3 percent increase over last year, although the same policy with inflation protection is now 20 percent cheaper, at $1,665 a year. The same two policies for single women average $1,600 and $2,600 a year, respectively, essentially the same as 2016.

But the association points out that costs for virtually identical policy coverage still varies significantly from one insurer to the next. Its analysis found rates varied by as much as 70 percent for the same coverage. For example, a 55-year-old single woman could pay as little as $1,450 a year or as much as $2,650, depending on which insurer she buys from. "You generally only buy long-term care insurance once, so it's important to do it correctly the first time," said Jesse Slome, the association's director.

The most economical way to obtain long-term care coverage is to bundle it with an asset-based insurance product such as a tax-deferred annuity. Typically, if an annuity will pay 3% annually, you can add a long term care benefit with a cost of 1.5% to 2% in yield. Some companies also offer a benefit that will continue to pay for your long-term care even if the company has to pay out more than the value of your original investment plus accumulated earnings.

Another way to reduce your premium costs, if you have a need for life insurance, is to attach a long-term care option as an extra benefit or rider on your policy. This option is now available on both term policies and policies that build cash value, and its cost is usually more stable than stand-alone long-term care coverage.

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