What Percent Of The Population Has Long Term Care Insurance?

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William Bridgers
Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
Short answer: About 8%Long answer: It's hard to say exactly how many people own some type of policy that covers paying the costs of long term care - should one qualify for it - because there are many types of insurance policies that are not just "stand-alone" long-term care policies, but plans of insurance that include being able to use a percentage of other plan benefits for paying long-term care costs:1. Stand-alone long-term care insurance covers only long-term care costs. It has no cash value. When a policy owner dies, coverage either lapses or stops paying benefits. It is not transferable. It cannot be bought or sold on a secondary market. This type of long-term care insurance is sometimes referred to as "traditional" long-term care insurance, as well. It is the type of coverage that is most often associated with the "percentage of Americans that own their own long-term care insurance".2. Hybrid long-term care contracts consist of having long-term coverage and a life insurance policy that guarantees to at least return the full premium paid into the policy to the insured's designated beneficiary. Usually, these are single-premium contracts, but some have options to also pay over a specified period of time, such as 5- or 10-years.3. Linked life + long-term care policies are basically a traditional permanent life insurance contract (Whole Life or Universal Life, including the Variable or Indexed type). If a person qualifies for long-term care and they have the long-term care rider on their life policy, they may apply to the insurance company to advance or accelerate the face value of the policy (death benefit) to pay for the costs of care. There are various limitations on how much can be advanced at a time. If the face value of the life contract is completely advanced for long-term care, there is usually a residual death benefit of $5,000-$10,000.4. The latest addition to life insurance product lines are policies offering "living benefits", one of which is very similar to the linked-life policy. In fact, the only difference is that a medical professional has to state in writing that the insured is not likely to recover from the condition that qualifies for long-term care benefits. (True long-term care insurance does not require that.) This type of living benefit is most often referred to as "chronic care" or "extended care". Annuities may also have special considerations for paying out portions of the account value for long-term care costs.The point is, people who own life insurance or annuity contracts with long-term care accommodations are not typically included in with the 8% that own traditional long-term care. So, the real percentage of those that have made some type of insurance purchase to offset long-term care costs is greater than 8%. I doubt, however, that the total percentage of Americans that own any of the above-described types of policies would exceed 20% at this time.
Answered on July 20, 2013
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