Join the presenter, Michael Kitces and other participants following Wednesday's Live Virtual Seminar (9/24,3:00 PM ET) as they share thoughts about the presentation.

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 On behalf of FPA, I'd like to thank Michael Kitces for his time today. This last question was remaining from the session:

Brownie writes:
1) Where does one go to learn more about state LTC partnership programs?
2)  Is there a rule of thumb as to at what age of the applicant do LTC policies typicallly just become prohibitively expensive?
3)  Is there an optimum age at which to buy LTC policies?

Brownie,

These are great questions! Let me answer each one in turn...

1) For some general information on state LTC partnership programs, AARP has put out some useful educational material at: http://www.aarp.org/research/longtermcare/insurance/fs124_ltc_06.html. However, for more in-depth detail about what's currently available in each state, the best resource material I've found on the web is produced by Thomson Healthcare at http://www.dehpg.net/LTCPartnership/map.aspx. In addition, you can generally find information for your state by looking to your state's own Department of Insurance, which typically will either have resource information themselves, or be able to direct you to the state organization that does have oversight and provides information.

2) I don't think there's any concrete rule of thumb as to the maximum age where policies are prohibitively expensive, since it will depend on the wealth of the client (what does "prohibitively" mean), and the size of the policy they're trying to buy in the first place (e.g., $250/day for Lifetime benefit becomes "prohibitive" earlier than $150/day for 2 years). That being said, the statistics I've seen suggest that it's pretty rare for many people to purchase policies any later than their early 80s (and frankly it becomes extremely difficult to even underwrite policies at that age), and that generally the frequency of purchases trails off significantly for people as they get into their later 70s. The overwhelming majority of LTC purchases seem to occur in the age 55 to 75 range.

3) Given the trend of long-term care insurance policy pricing, in recent years the "optimum" age to purchase LTC policies has basically been "as early as possible", and I've seen many practitioners begin to focus on LTC coverage when the client turns age 50. Given how policies are priced, and the opportunity to start compounding inflation adjustments earlier, for many policies it is actually cheaper to buy coverage for longer periods of time at earlier ages - for example, in many cases it's cheaper to pay for 25 years of coverage starting at age 55, than for 15 years of coverage starting at age 65, AND you get the extra 10 years of coverage to boot. This is because the scale for long-term care insurance increases significantly with age. Moreover, to the extent that companies have been tending to make their policies a little more liberal, and overall have found that they underpriced early policies, new versions of policies from many companies tend to be more expensive for the same age than earlier policies - for example, today's 65 year olds are generally finding similar LTC covearge more expensive than the 65 year olds who bought in 2000 (although that trend can't continue indefinitely). And of course, any delay means there is also a risk of having a change in health status that affects the ability to be underwritten in the first place. That doesn't mean clients should just buy coverage in their 20s or 30s, but the trend I've been seeing is that a lot of long-term care experts are finding consensus advocating for people to seriously look at purchasing long-term care insurance sometime in their 50s.

I hope that helps a little!
- Michael
Publisher, The Kitces Report, www.kitces.com
Blogger, Nerd's Eye View, www.kitces.com/blog