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When should I purchase long-term care insurance for my aging parents? Is there a suggested minimum age?


Long-term care policies pay expenses for nursing home stays or home-based assistance. They do not cover medical costs, although the need for such care often results from a medical condition. It is generally believed that buying a policy earlier is more sensible, all else being equal, because premiums will be lower for several reasons.

One is a matter of simple arithmetic: Spreading payments out over a longer period lowers the average one. Moreover, those extra years are when the policyholder is younger and less likely to need to care. A third factor is that the insurance company that wrote the policy will have longer to put the premiums to work and will therefore factor in greater investment gains.

Whether or not they took this into account, the average age of policy buyers fell from 68 to 61 between 1990 and 2005, according to a study by LifePlans, a firm that provides clinical assessments for the health insurance industry. But here’s why it might be better to wait a while to buy coverage for your parents: Interest rates are near their lowest levels ever, which means that investment earnings are low, too. That is likely to result in premiums being higher than they otherwise would be. With that in mind, you might want to wait until there is an increase in rates, which are low in large part due to Federal Reserve policies and not market forces. If you expect your parents to need care soon and would rather not wait, well, it might be too late to buy a policy. Their condition would be reflected in the premiums.


-Conrad de Aenlle