Long-term care insurance companies will pay a projected $15 billion a year to policyholders in 10 years and more than twice that amount in 2032 when today's 60-year-olds reach their 80s, according to a study released by the American Association for Long Term Care Insurance.
Long-term care insurers paid $6.6 billion in claim payments to some 264,000 people last year, the association said.
"By 2032 insurers are expected to pay $34 billion a year in benefits -- a 415 percent increase," Jesse Slome, the association's executive director, said in a press statement. "The quadrupling in benefit payments is the result of aging of policyholders, policy value increases and the continued growth of individuals purchasing protection. State regulations require insurance companies to set aside significant reserves ensuring that today's insurers are prepared to pay increasing claim costs in the future."
The study focused on traditional long-term care policies. Billions more in benefits will be paid to people who purchase hybrid life insurance products that include long-term care benefit riders.
About 8 million Americans now have some form of long-term care insurance protection, the association reported. More than 320,000 individuals purchased new coverage in 2012, an increase over 2011, according to the "2014 Long-Term Care Insurance Sourcebook" published by the association.