Take Advantage of Insurer "Sweet Spots"

The sweet spot on a tennis racket or golf club is the location where you get the most power from your stroke. With long-term care insurance, the sweet spot is where you get the most protection for the least cost.

Finding the sweet spot is especially important when you look for long-term care insurance. That's because your cost is generally set for the life of the policy (though this is not a guarantee). And, because it almost never pays to change policies or insurers down the road. Policy costs are based on your age when you apply and your health.

So, you want the best cost for the best protection from the get-go.

Each insurer sets their own rates based on the type of clients they seek to attract. The company with the lowest cost for a 55-year-old married couple, may not be the least expensive for a 55-year-old single individual or, for that matter, a 64-year-old married couple.

There are two kinds of insurance professionals who offer long-term care insurance. Agents generally represent only one company (which may indeed have the best offering). Brokers typically are independent and can represent multiple carriers. They can shop the market.

Members of our Association consist of both categories. We suggest you ask whether the professional is comparing policies and how many they are looking at before recommending a solution.

Your Good Health Today Can Save You 10% to 20% Each Year

Drivers without accidents and tickets pay less for their auto insurance. Individuals with few or no current health conditions pay less for their long-term care insurance. Insurers generally offer a 10% deduction.

And, best of all, this good health (some call it preferred health) discount is locked in. That means, you don't lose the savings when your health changes. And, as you get older, it will change.

A study conducted by the American Association for Long-Term Care Insurance in 2008 revealed the percentage of applicants who qualify for good health discounts. It's clearly to your benefit to start the process at younger ages, certainly while in your 50s.

Percentage of Applicants Who Qualify for Good Health Discount

Married Couples and Partners Can Save 15% to 40% Each Year

Discounts are offered to married adults and even unmarried adults who are living together. These discounts vary from one insurer to another and typically require that both individuals purchase coverage.

However, some companies will offer a discount when only one couple purchases coverage (sometimes only one individual is insurable). Some companies offer discounts to domestic partners or individuals in committed relationships.

Adding A "Deductible" Can Save 20% Each Year

You are probably familiar with the concept of deductibles on your car, home and even your health insurance. Simply, you pay some of the cost before your insurance kicks in.

Deductibles on long-term care insurance policies are typically referred to as the Elimination Period. This is the number of days you choose to pay fully until your benefits for qualifying care begin.

The longer your Elimination Period, the lower your annual premium will be. Keep in mind that, generally, your initial need for long-term care will not be as intense or costly as the care you'll need over longer periods of time. Maybe you have family members or community resources you can turn to for those initial days.

A Defined Benefit Period Will Save 16% to 53%

One of the most difficult decisions you'll face when selecting your long-term care insurance is how long should benefits last. No one can predict how long you'll need care.

Why averages are not relevant. Because your chances of needing long-term care are either 0% … or 100%. Thus, a good way to approach your planning is to look at the value of financial assets you want to protect with long-term care insurance. Then you can back into a daily dollar amount and number of years of coverage.

What can you save? A policy that pays for 5 years will save between 16% and 27% yearly compared to an unlimited (also called a lifetime) benefit. A policy that pays 3 years will save 36% to 39% compared to an unlimited benefit.

Two People Sharing Benefits Can Reduce Total Cost

There is an increasingly popular way for married couples to reduce their cost. Most companies now offer a shared care benefit that gives couples a pool of money to work with.

A typical concern with buying a defined period benefit is what happens if more care is needed. With a married couple, no one can say which spouse will need care … or for how long.

The Shared Care Option is viable option when cost for an unlimited policy is an issue. Say both husband and wife buy a 3-year policy (much more affordable). While adding the option costs more, it's definitely less than each person buying higher levels of protection.

The Shared Care options vary from one company to another so be certain to ask for a thorough explanation.

Are You Eligible For Coverage Through Your Job?

A growing number of employers are offering long-term care insurance. Some offer it as a voluntary benefit (you pay all costs); some will share in the cost or even provide a nominal level of protection.

If you are eligible for long-term care insurance through your employer it's definitely worth looking into the plan. That's especially true if you have health conditions.

But, if you are in good health and qualify for spousal (married) discounts, you should compare the policy coverage and costs with an individual policy. Employer-provided plans generally do not offer these discounts. You may find you'll actually pay less for better coverage on an individual basis.

A Few Other Savings Ideas

Insurers generally allow you to pay monthly or once a year. Paying on an annual basis can save you up to 8 percent each year.

If you are a business owner, read our section on tax deductibility. You may be able to take advantage of significant tax savings and there's nothing better than having Uncle Sam pay a good part of your long-term care insurance protection.