Long-Term Care Insurance

Long-Term Care Insurance

Long-term care (LTC) insurance pays for services to help individuals who are unable to perform certain activities of daily living without assistance or who require supervision due to a cognitive impairment such as Alzheimer’s disease. According to the U.S. Department of Health and Human Services, about 70 percent of individuals over age 65 will require at least some type of long-term care services. There were 45 million people age 65 and older in 2013, accounting for 14.1 percent of the U.S. population, or about one in every seven Americans, according to the U.S. Census Bureau. By 2030 the Census Bureau projects there will be about 73 million older people and about 83.7 million in 2050.

Nearly 5 million people were covered by long-term care insurance in 2013, according to a study by LIMRA International. The average first-year premium for individual LTC coverage purchased in 2013 was $2,359, down 5 percent from 2012. In 2012, 28.7 percent of new long-term care insurance policies were purchased by individuals under the age of 55, and 82.7 percent of buyers were under the age of 65, according to a study by the American Association for Long-Term Care Insurance. The average age when people applied for coverage was 56 years. The age of new buyers has been slowly dropping, according to the association. A decade or so ago the age of the average buyer was between 66 and 67.

 

INDIVIDUAL LONG-TERM CARE (LTC) INSURANCE, 2013 (1)

  Lives Percent change,
2012-2013
Premium
($ millions)
Percent change,
2012-2013
New business 172,178 -26% $406 -30%
In-force (3) 4,850,000 (2) 9,800 3

(1) Based on LIMRA International's Individual LTC Sales survey, representing over 95% of the individual LTC market.
(2) Less than 1 percent.
(3) Includes estimates for non-participants

Source: LIMRA International.

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  • The number of Americans purchasing LTC insurance in 2013 fell 26 percent from 2012, and premiums declined by 30 percent, based on new business.

THE AGING U.S. POPULATION

The dependency ratio, or the number of people 65 and older to every 100 people of traditional working ages, is projected to climb rapidly from 22 in 2010 to 35 in 2030, according to the U.S. Census. The expected steep rise in the ratio over the next two decades reflects the projected proportion of people 65 and older climbing from 13 percent to 19 percent of the total population over the period, with the percentage in the 20 to 64 age range falling from 60 percent to 55 percent.

PERCENT OF HOUSEHOLDS WITH ONE OR MORE PEOPLE AGE 65 YEARS OLD AND OVER, 2011

State Percent Rank (1) State Percent Rank (1)
Alabama 26.0% 15 Montana 26.5% 9
Alaska 16.4 51 Nebraska 23.7 41
Arizona 27.0 7 Nevada 24.3 33
Arkansas 26.3 13 New Hampshire 24.9 28
California 24.7 29 New Jersey 26.9 8
Colorado 20.6 48 New Mexico 26.0 15
Connecticut 26.5 9 New York 26.4 12
Delaware 28.0 5 North Carolina 24.2 35
D.C. 20.2 49 North Dakota 23.4 42
Florida 31.9 1 Ohio 25.7 20
Georgia 21.8 46 Oklahoma 25.3 24
Hawaii 31.4 2 Oregon 25.9 18
Idaho 24.5 31 Pennsylvania 28.1 4
Illinois 24.5 31 Rhode Island 26.5 9
Indiana 24.1 37 South Carolina 26.3 13
Iowa 25.5 22 South Dakota 24.6 30
Kansas 24.1 37 Tennessee 25.2 27
Kentucky 25.3 24 Texas 21.4 47
Louisiana 24.0 39 Utah 19.9 50
Maine 27.5 6 Vermont 25.7 20
Maryland 24.2 35 Virginia 23.8 40
Massachusetts 25.8 19 Washington 23.1 44
Michigan 26.0 15 West Virginia 29.1 3
Minnesota 23.2 43 Wisconsin 24.3 33
Mississippi 25.5 22 Wyoming 22.3 45
Missouri 25.3 24 United States 25.2%  

(1) States with the same percentages receive the same rank.

Source: U.S. Department of Commerce, Census Bureau; American Community Survey.

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  • In 2011 Florida had the highest percentage of households with people age 65 or older followed by Hawaii and West Virginia.
  • Alaska had the lowest percentage of households with people age 65 or older, followed by Utah and the District of Columbia