Am I too young to buy long-term care insurance?
Long-term care insurance is an important type of coverage that can help you avoid a major financial crisis when you get older. The services you might need as you age range from nursing home care to assisted living to occupational therapists, and they cost a lot of money — more than most people can afford out of pocket.
Luckily, long-term care insurance allows you to pay a premium for coverage that can help defray these costs later in life. It's important, though, to buy long-term care insurance at the right time.
"Timing when to apply for long-term care insurance is a balancing act; on one hand you don't want to purchase your policy too early as you'll likely be paying premiums for more than two decades before potentially filing a claim," says Nick Covyeau, a financial advisor with Swell Financial. "But you also don't want to wait too long and experience a significant increase in your premiums."
Here's how to know whether you are ready to buy long-term care insurance or should wait instead.
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Am I too young to buy long-term care insurance?
There are a lot of questions to ask when buying long-term care insurance, including how much coverage to get and whether to get a linked-benefits plan. Before you answer any of those questions, though, it's important to determine whether you are old enough to justify purchasing a plan.
Here are some tips to determine whether you're at the right age to buy a plan.
Start looking in your 50s or 60s
Generally speaking, people in their 50s and 60s may want to start thinking about buying a long-term care insurance policy. Covyeau says that he starts broaching the topic of long-term care insurance with his clients when they hit their late 50s.
If you buy long-term care insurance earlier than that, you aren't likely to file a claim for a while. If you decided to purchase a long-term care insurance policy at 40, for example, you could pay premiums for decades before filing a claim. This could cost you a lot more money than necessary.
Find a long-term care insurance policy that makes sense for you.
Don't wait too long to purchase a policy
It's possible to buy long-term care insurance too early, but you can also buy it too late. The older you get, the higher your premiums will typically be. Plus, most insurance companies will require a health exam before they insure you, and the older you are, the more likely it is that you will have health issues that raise the cost of a policy or get in the way of a company extending coverage to you.
Again, your 50s and 60s are the ideal time to start looking for long-term care insurance. At that age, you are typically young enough to qualify for insurance at an affordable premium, but you are also old enough to avoid paying premiums for longer than you need to.
The bottom line
If you are under age 50, it may not always make sense to buy long-term care insurance. You can compare prices and see what you might pay when you are ready, but if you buy coverage too early, you may end up paying premiums for much longer than you need to. On the other hand, if you are in your 50s, don't wait too long or long-term care insurance may be too expensive — or not available at all.
