The Chances of Using my Long Term Insurance Policy

What are the chances I might actually need Long Term Care? This is a question often asked by clients when shopping for LTC Insurance.

Know your Risk

Having a LTC insurance coverage doesn’t necessarily mean you will use it. This is only taking one step towards securing your assets and your health in case anything happens. Statistics suggest that 70% of Americans over the age of 65 will need care at one point in their life. Although you can’t know for sure, your family history is the main way to determine your risk of needing long-term care. If chronic diseases like heart disease, Alzheimer’s and others run in your lineage, then your chances of needing a long term care are very high. Also, factor in the status of your personal health health since the depression, obesity and all-known health complications increase your need for the care.

Many people ignore the need of buying a policy until it’s too late. Regardless of your age or health status, there is always a chance you might need the long term care. And since the financial risk on you is way higher than the policy cost, you’re better off paying to pass this risk over to the insurance company.

Policy Use

To buy or not to buy? That’s a question many people are asking when it comes to buying an insurance policy. Of course, it’s always possible to pay your Long Term Care bills, assuming that the care needed doesn’t take long. However, if you’re going to need LTC services for months on end (or years), an LTC insurance policy is the only way to safeguard your entire savings and avoid being a burden to your children.

33% policyholders use their benefits

If you have an insurance policy or are planning to purchase one the chances of using it is 1 to 3. Mathematically, the chance that you’ll need care stand even higher, at 50%. But due to the elimination period (usually 90 days) not all policy holders who receive care end up using up their benefits.

Nonetheless, 33% is a significantly high risk, more so when compared to the risk of auto accidents (0.4%), and the risk of house fires (0.08%). Although the risk of getting involved in a car accident is way lower, very few people would every consider driving without auto insurance (assuming it was even legal). Likewise, very few homeowners will be comfortable without homeowner’s insurance.

So of all people who buy LTC plans, one in three uses their police. The only question is – to what extent do they use the policy?

Usage statistics

  • 15% of insurance policy holders use their benefits for 1 year or less.
  • 19% use their policy for over 1 year. Of these, only 7% will utilize all their benefits (100%). Less than 15% of individuals who utilize their plans for over 1 year will consume 50% of their total benefits.

For the group that use their policy for more than a year, 3.9 years is the average duration of time when benefits are claimed.

You can reference this data to decide whether or not you actually need to buy a plan. And if you need to, how much benefit period do you think works best for you?

To learn more about LTC, read here. You may also complete this form to receive a no-brainer comparison of quotes from the top LTC insurance providers in the market.

At LTC Key, we actively seek to promote knowledge on the risk of Long Term Care. We strive to lay out all facts in a pressure-free and unbiased setting so you can make a decision that best reflects your needs and preferences. Our approach is the exact opposite of what the typical local insurance agent will do – book an appointment and come to your house with a hard sell.

Keep in mind that the statistics above were compiled by our analytical department. They are meant to inform you, not to alter the course of your plans for the future. If you need any more help or have questions answered, simply get in touch.