Long Term Care Insurance Claims

The largest long term care claim has grown to $1.7 million.  While searching for something else, I came upon my notes from a presentation by Genworth Financial on that company’s long term care insurance claims experience.  Genworth is by far the largest player in the long term care insurance market with more people insured than any other carrier.   Here are some interesting claims facts.*

Where People Receive Care:

      Home Care: First benefit 72%, Latest benefit 64%.

      Assisted Living: First benefit 13%, Latest benefit 18%.

      Nursing home: First benefit 15%, Latest benefit 18%.

      Of 100 people who receive long term care benefits, 80 never transition from where they started, 15 people transition once, and 5 people transition twice.

Claim Duration: 44% of claims last less than one year due to short recoverable illness, sudden terminal illness, or single use of non-caregiving benefits (equipment, training, etc.).  The average length of claims that last more than a year is 3.9 years.  14% of claims will last more than 5 years.  The largest single claim is $1.2 million (That claim is ongoing and the amount of benefits paid has just been updated to $1.7 million.)  The claimant, a woman, purchased coverage at age 43.  Three years later, her long term care insurance claim began and has continued for almost 15 years.  Genworth’s longest claim has been ongoing for 18.7 years. 

Age at Time of Claim: Age 50 & younger, 1%.  Age 51-55, 2%.  Age 56-60, 3%.  Age 61-65, 5%.  Age 66-70, 11%.  Age 71-75, 19%.  Age 76-80, 27%.  Age 81-85, 23%.  Age 86-90, 7%.  Age 91-95, 2%.  At the extremes, Genworth Financial’s youngest claimant (at time of claim) was age 27 and the oldest age 103.  The average age of claimant was 78.4.

Leading Reasons for Needing Care (for claims lasting more than one year): Dementia (mostly Alzheimer’s Disease), 45%.  Cardiovascular, 17%.  Musculoskeletal, 14%.  Cancer, 5%.  Respiratory, 5%.

*All of the above comes from a study of Genworth Financial’s claims covering the period December, 1974 through December 31, 2010.  Please note that the study only includes people needing care who had long term care insurance.  What might the numbers be for people needing care who did not have insurance? 

What can we glean from this information?  The average long term care insurance claim that lasts for at least a year goes on for about four years.  But 14% of the claims last more than five years, with some much longer.  The average age at which someone begins a claim is about 78, but some start later and some begin much earlier.  Dementia is the largest single claim diagnosis, but people need long term care services for many reasons.  Very few of us are “average”.  The need for long term care services can happen to anyone at any time.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence.  Long term care insurance policies vary from company to company & within the same company.  Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 

© Raymond Smith, The Long Term Care Specialist, 2012