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Long-term care insurance rates increase
By Insure.com staff

Long-term care insurance rates for policies offered today are 6 percent to 17 percent higher than comparable coverage offered a year ago, according to the 2012 National Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance.

"Insurance prices have increased as a result of the historic low interest rates and yields on fixed-income investments," Jesse Slome, the association's executive director, said in a press statement.

Between 40 percent and 60 percent of the dollars an insurer accumulates to pay future claims comes from investment returns, he said.

The price index is based on the association's analysis of what consumers pay for the most popular policies offered by 10 leading long-term care insurance companies. The average cost for a 55-year-old single individual who qualifies for preferred health discounts is $1,720 for between $165,000 and $200,000 of coverage. In 2011, the same coverage would have cost an average of $1,480 a year.

The association also found the spread between the lowest- and highest-priced policies widened in the last year.

"No single company always had the lowest nor the highest rate, which is why we stress the importance of comparison shopping," Slome said.

The study examined prices for single individuals who are 55, and couples ages 55, 60 and 65.

A 55-year-old couple purchasing long-term care insurance protection can expect to pay an average $2,700 per year (combined) for about $340,000 of benefits, which will grow to more than $700,000 of combined coverage when each member of the couple turns 80, according to the association.

The association priced policies that included a 3 percent compound inflation growth factor. A policy valued at $170,000 for each policyholder would grow to roughly $300,000 in 20 years. Married couples can buy policies with a "shared care rider," which means the combined benefits can be used by either spouse or split between them.

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