Long-Term Care Policy Holders Drew Record Benefits This Year

The more than $12 billion paid represents an increase of $2 billion over the total claim benefits drawn in 2018.

The nation’s long-term care insurers paid out $12.3 billion in claims during 2021, representing a significant increase over prior years, according to the American Association for Long-Term Care Insurance (AALTCI).

As pointed out by Jesse Slome, AALTCI director, the amount of claimed benefits paid to policyholders grew by approximately $700 million compared to the 2020 payout. According to the association’s annual report of claims paid, the $12.3 billion paid represents an increase of $2 billion over the total claim benefits paid by the industry in 2018.

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“Claim benefits were paid to some 336,000 policyholders,” Slome says. “Some claims amount to small amounts and some can be significant, totaling over $1 million.”

Partly explaining the growth in payments is the fact that the number of individuals paid during 2021 grew by roughly 11,000 compared to the prior year.

“Even if you do a simple calculation, the average claim amount paid out for the year would equal $36,600. And claims can last for several years,” Slome adds. 

The amount reported represents claims for those owning traditional or health-based long-term care insurance. The association report does not include data for those who have purchased a linked-benefit policy. These include life insurance or annuity policies that can also provide payouts for qualifying long-term care needs.

According to data provided by Genworth’s U.S. life insurance division, fewer than 10% of those who will likely need long-term care insurance own a policy. Related data from Northwestern Mutual suggests seven out of 10 people over the age of 60 will face a long-term care event.

What typically prompts a person to decide to inquire about or purchase long-term care insurance is having experienced the need for such care in their own family, according to Northwestern Mutual. Or, perhaps, they are facing a medical issue of their own.

A HealthView Services analysis reveals that an average, healthy 65-year-old male/female couple has a 75% chance of at least one spouse requiring some form of long-term care if each live to their actuarial life expectancies. “Regardless of the type of care required, those who fail to plan for long-term care may face substantial medical bills with few means to pay other than by liquidating assets,” it says.