It was Spring of 1999 and I was a rookie Long Term Care Insurance agent for one of the major companies. We worked for an aggressive agency here in Atlanta that really pushed hard to get marginal cases approved. That Spring, I along with my class of agents were of course hungry for a sale as I’d spent the first six months working for free, called the “pre-agent” process. This was essentially a time period where that you were not paid unless you made a sale and would weed out the non-serious agents. I really needed to get my first sale.
I had a conversation with at the time 57 year old lady who lived South of Atlanta about possibly coming out to visit her and discuss the Long Term Care Insurance topic. She lived about an hour away so we were trained to pre-screen the prospects for health so we did not waste time going to vistit people who were uninsurable.
I began to run down the basic health questions like height/weight, medications and found out she was a bit heavier than norm. I asked about her mobility and she said it was okay but did use a “rascal scooter” when she went to the grocery store. I reluctantly set the appointment and knew I needed to run this by my sales manager. We called the home office and spoke to their senior underwriter and told them of the scooter. To our surprise they said okay to submit the application.
Needless to say I made the sale to that lady, she was approved several weeks later and needless to say, she was my first claim I process just two years later.
This kind of loose underwriting was pretty common back in the 90’s and early 2000 years when interest rates were high and companies could invest in t-bills and get triple what they get today. Now earning for insurance companies are down and it’s tighter than in the past. That along with the fact they approved people they otherwise should not have has led to higher rates on long term Care Insurance and much tighter underwriting in today’s market.
There was a study done back in 2010 that went over the denial rates amongst certain age groups. LTC Tree, which is the leader in buying Long Term Care Insurance “virtually” and online is our company. Since we are the biggest and have the most real-life data we decided to see if underwriting standards have changed in the past five years. We knew it has just from experience as the LTCI industry’s underwriters as a whole have gotten tighter than a Russian figure-skating judge, judging the USA in the Olympics. They now charge women more than men, the height/weight ratios are stricter, conditions such a controlled bipolar disease is no a no-go and diabetic clients are almost certainly declined these days, etc.
We took a look at our database of almost 20,000 cases and wanted to see what has has happened to denial rates since 2010. The results were shocking:
|Age of Applicant||2010 Denial Rate||2015 Denial Rate||Change|
|Under Age 50||9.5%||18.75%||97%|
|50 to 59||14.0%||33.2%||137%|
|60 to 69||23.0%||39.7%||72%|
|70 to 79||45.0%||53.0%||18%|
|80 and Over||66.0%||N/A||N/A|
2010 Data from AALTC. 2015 Data from LTC Tree.
At what age should you buy Long Term Care Insurance?
As you see in the data that across the board that underwriting is denying all at higher rates and people in their 60’s getting declines about 40% of the time up 72% from the denial rate just 5 five years before. What was most shocking is how much tighter the companies have gotten for people in their 50’s. Just five years ago if you were in your 50’s you were approved 85% of the time. Now, it’s just 67% of the time for a whopping 137% change.
This data is critical to know because the main “financial gurus” out there are giving boilerplate advice to people saying you don’t need to buy this before age 60. That advice has expired and needs to be re-thought because that 60 year old may very well no longer be insurable if they wait to buy long term care insurance until then.
We at LTC Tree advise people that as soon as you have the extra cash to pay the premiums and your are 45 or older, buy Long Term Care Insurance. You will save money in the long run because you will be paying such a lower rate vs. when you are older and you are more likely to be approved the younger you are as you can see in the above chart. If you’d like to learn more and get your quotes simply fill in the form below. Here’s more on our laid-back process if you are unsure, click here.