Protection. Insurance. Real Data To Help You Plan. A SPECIAL REPORT ON Long-Term Care A CONSUMER S GUIDE TO LONG-TERM CARE INSURANCE PROTECTION

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1 NSUMER S GUIDE T LNG-TERM RE INSURNE PRTETIN g r o F ew V e y l l I T L SPEIL REPRT N Log-Term are Isurace Protecto Real Data To Help You Pla What s Your Real Rsk f Needg Log-Term are? How Log Do lams Really Last? Publshed by the merca ssocato for Log-Term are Isurace, exclusvely avalable for members osumer Educato Dvso

2 FILURE T PLN IS PLN FR FILURE The Rsk fter You Tur 65 Here are statstcal chaces the followg evets wll happe after reachg age 65 (based o average remag lfe expectacy) Wome Me Major House Fre 2.6% 2.2% Severe ar 18.0% 15.5% ccdet Becomg DL* 72.0% 44.0% Dsabled or ogtvely Impared (2002 data) *ctvtes of Daly Lvg Data compled by Mllma Havg homeower s ad car surace s part of sesble plag. Plag for the rsk of eedg log-term care makes sese too. Why Watg Is Mstake You must health qualfy for log-term care surace protecto. Whe your health chages you wll pay more or be uable to qualfy etrely. Percetage of Log-Term are Isurace pplcats Who re Health Decled ge of pplcat % Decled Uder ge % 50 to % 60 to % 70 to % 80 ad ver 66.0% GD HELTH DISUNTS Isurers offer dscouts to those who are good health whe applyg for log-term care surace. You do ot lose the savgs whe your health chages. 62.0% of applcats betwee ages 40 ad 49 qualfed; 46.0% of applcats betwee ages 50 ad 59 qualfed. Source:, 2010 dustry study. levewg We are the frst geeratos of mercas where lvg to our 80s, 90s ad eve 100s s commo. s a result, we are the frst geerato where plag for log-term care s really a ecessty. If you ve had a agg famly member who eeded care, you uderstad the ssues the emotoal toll ad the facal cost. If you have t wtessed log-term care persoally, you may be woderg what ths s all about. Ths Specal Report was created to provde the latest formato o ths mportat topc. It s desged to help your uderstadg of the ssue ad to help your plag process. Ths gude exames: Who really eeds log-term care? Why s care eeded? Why log-term care o loger meas ursg home care. How log do log-term care clams last? Plus, formato we have foud cosumers ofte wat to kow. If we take a late retremet ad a early death, we ll just squeak by. fter readg ths gude, you ll lkely have more questos. How much does surace protecto cost? What dscouts ad ways to save are avalable? The member of the merca ssocato for Log-Term are Isurace who provded you wth ths gude ca help get the formato you eed. levewg SPEIL REPRT KNWLEDGEMENT The ssocato ackowledges two of the ato s leadg log-term care surace dustry experts for coductg the exclusve clams study cotaed ths gude. Daw Helwg, FS, M Mllma, Ic., hcago, IL osultg ctuary ad a Prcpal specalzg seor products. Fellow of the Socety of ctuares ad a Member of the merca cademy of ctuares. Wth persmsso Barbara Smaller/odé Nast Publcatos/ Deborah Grat, FS, M Mllma, Ic., hcago, IL osultg ctuary ad a Prcpal specalzg seor products. Fellow of the Socety of ctuares ad a Member of the merca cademy of ctuares. opyrght, Ths report s copyrght protected by the merca ssocato for Log-Term are Isurace (). Reproducto or use s prohbted wthout wrtte permsso from. formato, call (818) or vst our webste at for cotact formato.

3 WH NEEDS LNG-TERM RE INSURNE? Most artcles ad brochures you read provde geeralzed formato about log-term care ofte usg govermet statstcs. By cludg the sgfcat segmet of the populato who rely o Medcad (welfare) to pay for log-term care, govermet data ad formato really s ot as relevat to people lke you - who are plaers - who have savgs ad assets to protect - who do ot wat to rely o whatever govermet programs may be avalable whe you may ultmately eed care. The followg formato s, we beleve, far more relevat. It looks at the over 8 mllo mercas who have purchased log-term care surace ad the 180,000 who receved clam beeft paymets a past year. Whe overage Is Bought Uder ge % ge 35 to % ge 45 to % ge 55 to % ge 75 to % ge 75 or older 1.0% Whe lams Beg Uder ge % ge 50 to % ge 60 to % ge 70 to % ge 80 ad over 59.2% Source: 2010 LT Sourcebook, Top auses Log-Term are Isurace lam Home Health are Sklled Nursg Home By lam out lzhemer s lzhemer s By ve. Paymet Stroke lzhemer s By Legth f lam Nervous System lzhemer s Uder ge 65 acer Nervous System ge 65 to 74 acer lzhemer s 75 or older lzhemer s lzhemer s Percetage f Log-Term are Isurace lams By Geder Home Health are le Vewg le Vewg Sklled Nursg Home lzhemer s Dsease F (17%) M (19%) F (26%) M (28%) Stroke F (10%) M (15%) F (12%) M (15%) rthrts F (18%) M (8%) F (15%) M (5%) acer F (14%) M (18%) F (7%) M (9%) Ijury/ccdet F (13%) M (5%) F (12%) M (6%) Source: Ffth Itercompay Report prepared by the Socety of ctuares, publshed November based o 6.5 mllo log-term care surace polces ad just over 172,000 clamats. There s No Place Lke Home Most log-term care takes place at home. a small percetage of care s provded sklled ursg home facltes. Log-Term are lams Pad for those wth dvdual log-term care surace polces. Home are 42.0% sssted Lvg 27.5% Nursg Home 30.5% verage ost of are (2010) Home Health de $21/hour sssted Lvg $3,100/moth ommuty $37,200/year Nursg Home $220/day Prvate Room $80,300/year $162,000/2-years Source: merca ssocato for Log-Term are Isurace, 2010 LT Sourcebook. Estmated Years of Log-Term are Need fter Turg ge 65 Percet of People More tha 5 years 20% 2-5 years 20% 1-2 years 12% 1 year or less 17% No years 31% Based o projectos for people turg 65. Source: P. Kemper

4 WHT S YUR REL RISK? PLNNING IS VITL FR WMEN Log-term care plag s especally mportat for wome who are marred or may be lvg aloe. Wome have 10 tmes the chace (as me) of reachg age 85. Wome are twce as lkely to be lvg aloe at older ages. Wome are far more lkely to go to a ursg home. Wome are more lkely to suffer from lzhemer s dsease. WMEN BENEFIT MRE From Havg Log-Term are Isurace Protecto Percetage of ll lams Pad Sgle Wome 41% Marred Wome 25% Sgle Me 12% Marred Me 22% Most Frequet Reasos Wome Receve LT Isurace Beefts Demeta acer Fractures Stroke steoarthrts PD ogestve Heart Falure Spal Steoss Parkso s Hp Fracture / Replacemet Kee Replacemet Source: Geworth Facal. lamat Study. levewg The questo people ask most ofte s what s my rsk? It s a vald questo. But the fact s your real rsk of eedg log-term care at some pot your lfe s ether gog to be 0% or 100%. Ether you wll eed log-term care or you wo t. verages merely show how may people out of every 100 have a eed. Nce formato to kow; but o predcto of your dvdual real rsk ad eed. WHT INFRMTIN IS HELPFUL ce you uderstad that a rsk exsts, your two bg decsos are; 1) how do you wat to deal wth t ad, 2) f log-term care surace s a opto, how much protecto s approprate. The more protecto you wat the more coverage costs. IMPRTNT NTE: expereced log-term care surace professoal ca help you take advatage of dscouts ad show you ways to maxmze your coverage eve whe budgets are lmted. Sce o oe ca predct your real rsk the best we ca do s provde formato o what happes whe someoe wth log-term care surace has a clam. Kowg how log clams last ca help the process of decdg how much coverage to cosder. e of the most sgfcat ways to save o log-term care surace s by purchasg a less tha ulmted (lfetme) polcy. The Mllma study o the followg pages sought to see what someoe who buys surace s really gog to eed ad use. 4 REL PEPLE - REL LIMS Largest Log-Term are Isurace lams Surpass $1-Mllo Mark Some 180,000 polcyholders receved beefts a year. Here are 4 of the largest clams. MPNY : Largest ope clam: $1.2 mllo (female) levewg Purchased polcy at age 43, payg a aual premum of $1,800. Three years later clam bega ad has cotued for 12 years ($1.2 mllo beefts already pad). MPNY B: Largest ope clam: $1.02 mllo (female) Purchased polcy at age 72; payg a aual premum of $12,766. Three years later clam bega ad has cotued for 9 years ($1.02 mllo beefts already pad) for her ursg home care. MPNY : Largest ope clam: $990,000 (female) Purchased at age 57 ( 1992), payg a aual premum of $1,215. That same year she had a accdet ad has bee o clam ever sce (almost 15.7 years) provg you just ever kow. Your Rsk Is Ether 0% or 100% MPNY D: Largest ope clam: $690,000 (male) Purchased coverage at age 54, payg a aual premum of $2,560. overage was desged to pay beefts for 5 years. Two years later hs clam bega ad has cotued for almost 7 years. Source: merca ssocato for Log-Term are Isurace, 2009 dustry study.

5 SPEIL REPRT: LNG-TERM RE LIMS SPEIL REPRT Why are clams relevat? Too costly s the umber oe reaso may people gve for ot buyg log-term care surace. Whe t comes to buyg log-term care surace, the more polcy beefts you buy, the more you wll lkely pay. Thus, a ulmted or lfetme polcy that has the potetal to pay the most beeft wll also be the most costly. le Vewg The Potetal To Save Yearly cost savgs that ca be acheved by purchasg shorter-durato LT coverage. 5 Year vs. Ulmted = 30 % to 39 % Savgs 3 Year vs. Ulmted = 42 % to 54 % Savgs 2 Year vs. Ulmted = 51 % to 64 % Savgs Source: 2010 LT Prce Srudy The Mllma study sought to see what someoe who buys log-term care surace s really gog to eed ad use. If oe of the most sgfcat ways to save s by buyg less tha ulmted coverage, s ths really a prudet decso? LNG-TERM RE INSURNE PYS 180,000 mercas receve yearly beefts about $6.0 bllo beefts aually from ther log-term care surace polces. Source: 2009 LT Sourcebook, merca ssocato for Log-Term are Isurace Look t Log-Term are Isurace Polcyholders The study, oe of the largest to date, sought to determe ot just what type of coverage dvduals purchased but how ther selected surace protecto related to actual clams. lams were detfed as ether ope (stll ogog; 22%) or closed (beefts have ceased because of recovery, death or because the maxmum beeft had bee pad out; 78%). Nearly 29% of the polces looked at were lfetme (ulmted) beeft perod polces. Ths s mportat because clams o the lfetme beeft perod gve us the truest pcture of a clam throughout ts full legth. lams Study Data (ll ompaes ombed) # Polces # of pe # of losed Beeft Perod (years) Iforce lamats lamats 2 or less 176,636 6,379 48, ,736 11,691 30, ,337 4,797 14, , ,019 Lfetme 492,799 7,390 12,874 Total 1,674,003 30, ,636 le Vewg lams by Polcyholders w/ Ultd. Beeft Perods lam durato moths No. of lams losed lams 12.0% 6.8% 3.8% 1.9% 12,874 pe lams 43.0% 26.2% 15.2% 8.6% 7,390 Total 23.3% 13.9% 7.9% 4.3% 20,264 Hstorcally, log-term care surace dustry data has bee terpreted to say that oly about oe percet of clams last loger tha fve years. B From U.S. Departmet of Health ad Huma Servces Report 15% of home care recpets dd ot thk they would be able to receve care at home f they dd ot have ther (LT surace) polcy... about the same for sssted Lvg resdets. 83% of clamats agree that havg ther log-term care surace made t easer to obta eeded servces. The fdgs of ths study do reveal that overall 4.5 percet of total clams (all beeft perods) deed last 60+ moths. Source: Report for HHS / SPE ffce of Dsablty, gg ad Log-Term are Polcy Tables, B ad are based o data aalyzed by Mllma for clams experece of four leadg LT surers. harts D, E, F ad G are based o Mllma s 2009 Log-Term are ost Gudeles.

6 SPEIL REPRT HW LNG D LIMS LST? KEY STUDY NLUSINS The possblty of havg a log-term care surace clam that lasts loger tha three or four years s relatve low. More tha 3 years: 13.1 % More tha 4 years: 7.6 % More tha 5 years: 4.5 % However, f you are oe of the dvduals whose clam goes past the expected umber of years of your polcy, you ca expect to eed care for aywhere from two to sx more years. 55-year-old who exhausts a 3-year LT polcy ca expect to eed log-term care for aother 3.7 years (Male) to 5.3 years (Female). 82-year-old who exhausts a 3-year LT polcy ca expect to eed log-term care for aother 1.9 years (Male) to 2.9 years (Female). Source: Mllma clamat study. The study foud that 1 10 (10.9%) of 3-year polces actually pad beefts beyod the 36-moth tme perod ad oly 8.0% actually exhausted ther polcy beefts. Most log-term care surace polces sold today actually provde a pool of moey to pay beefts. They are geerally referred to as rembursemet polces. Your aget ca expla. Smply sad, f you do ot use all of the avalable beeft o a partcular day, the dollars rema your pool. s a result, a polcy desgated as a 2-year or 3-year Beeft Perod may actually pay beefts beyod the stated tme perod. It s referred to as salvage. s a example, the study foud that oe 10 (10.9%) 3-year polces actually pad beefts beyod the 36-moth tme perod. levewg The mportace of ths data s sgfcat because t more clearly shows the true percetage of people whose clams last beyod the specfc durato of ther polcy. The total of the shaded secto o hart shows the weghted average of both ope ad closed polces. pe clams are stll a dyamc umber ad are lkely stll uderstated compared to what the fal umber wll be. If overage Eds How Much Loger a The lam otue? The followg are averages. It s mportat to remember that o a pror page, we showed four real clamats whose clams lasted may years ad where the total beefts pad have exceeded $1 mllo for a sgle clamat. That sad, the study looked at four scearos; a male or female who goes o clam at age 55. d, a male or female who goes o clam at age 82. ll dustry data ad the chart shows that wome (at all ages) clearly ted to rema o clam for loger tha me. levewg We sought to forecast what happes to the (very) small percetage of polcy holders who buy a lmted-pay polcy, go o clam ad exhaust the beefts of ther polcy. % of lams Lastg X or More Moths by Beeft Perod lam Durato Moths Beeft Perod <2 1.4% 1.4% 0.2% 0.1% % 1.4% 0.4% 0.1% % 10.9% 1.4% 0.3% % 12.1% 6.0% 1.0% % 10.2% 6.1% 2.9% % 17.1% 8.3% 4.5% % 19.1% 10.9% 6.3% Lfetme 23.3% 13.9% 7.9% 4.3% Total 18.7% 8.0% 3.4% 1.4% Shaded verage 23.5% 13.1% 7.6% 4.5% D Years f Servce Remag t Ed of Beeft Perod I Years Polcy Male Female Male Female Beeft Perod age 55 age 55 age 82 age s see above, a female clamat who begs a log-term care clam at 82, has a 3-year beeft pla ad exhausts the beefts of her polcy wll lkely rema o clam for aother 2.9 years. purposes of ths calculato, the value of salvage (uused beeft dollars) were ot cluded.

7 LIMS DIFFERENES BY GE & SEX SPEIL REPRT Ths report looks at the probablty of a dvdual wth log-term care surace exhaustg the beefts of a lmted durato polcy. s hart E shows, the loger the beeft perod selected, the less chace of exhaustg polcy beefts. The age whe a clam begs also determes the lkelhood. lams that beg at youger ages ofte last loger as they ted to result from accdets or codtos that are ot lfe threateg. To rema cosstet wth other examples explaed, the study foud that the percetage of clamats wth a 3-year polcy who ca be expected to exhaust ther beefts raged from 22.4% (for clams startg at age 55) to 18.7% (for clams startg at age 82). The percetage s oly 15.6% for clams startg at age 72. Because wome are more lkely to experece loger clams, the lkelhood that a woma wll exhaust a lmted durato polcy s hgher tha that of a ma. (hart F) The study looked at wome ad me who beg a log-term care clam at age 82 (a typcal age whe clams beg). our 3-year beeft perod scearo, me had a 12.4% lkelhood of exhaustg the beefts of ther polcy. Wome face almost twce the rsk (23.5%). Where care s provded also plays a factor determg the rsk of exhaustg polcy beefts (hart G). The probablty of exhaustg a 3-year beeft perod for someoe recevg Home Health are s 2.5%. someoe recevg care asssted lvg or a sklled ursg home, the probablty s 26.1%. le Vewg Effect of ge o Legth f Servce (Both sexes ad all care stuses, rembursemet model) Modeled Probablty of Perso Exhaustg Beeft Perod lamat ge Beeft Perod % 41.7% 37.6% 43.1% 43.5% % 28.5% 23.9% 28.1% 28.6% % 19.3% 15.6% 18.7% 17.6% % 13.8% 10.7% 12.5% 10.4% % 9.8% 6.9% 7.8% 6.0% 6 7.6% 7.6% 4.8% 5.1% 3.6% 8 5.0% 4.7% 2.7% 2.4% 1.4% % 3.1% 1.6% 1.1% 0.6% Effect of Sex o Legth of Servce (ge 82, all care stuses, rembursemet model) Modeled Probablty of Perso Exhaustg Beeft Perod Beeft Perod Males Females % 47.3% % 33.5% % 23.5% 4 7.4% 16.3% 5 4.3% 10.5% 6 2.7% 6.9% 8 1.2% 3.3% % 1.6% le Vewg Effect of Locato of are o Legth of Servce (ge 82, both sexes, rembursemet model) Modeled Probablty of Perso Exhaustg Beeft Perod Beeft Nursg Home / Home Health Perod sssted Lvg are % 18.6% % 6.8% % 2.5% % 1.2% % 0.5% 6 7.1% 0.2% 8 3.1% 0.0% % 0.0% E F G FINL WRD Uderstadg the clams usage of those who have already purchased ad are recevg beefts from ther log-term care surace protecto ca gve you a more relevat pcture of your real rsk ad eed. But the ed, log-term care plag s a persoal matter. How much protecto do you wat? How much burde do you wat to place o famly members or loved oes? How much cost are you wllg to self-sure? How much ca you afford? LWYS TRUE: Whe t comes to log-term care surace, some protecto s always better tha oe. Thak you for takg the tme to read ths gude. We hope t has bee beefcal to your plag process.

8 g r o F ew V e y l l I T L BEUSE THINGS N HNGE TMRRW IT S SMRT T T TDY log-term care surace specalst or facal professoal ca aswer your questos ad help you obta affordable protecto. Please otact Me More Iformato URE H BR R S F I H N T F ITI S E I P SS E N E N S R H ERI RE INSU M PUR THE M M R -TE FR G N L Ths brochure s a geeral overvew of the subject. It s ot teded to provde tax or health advce. Tax formato s subject to chage. UNUTHRIZED REPRDUTIN PRHIBITED. The merca ssocato for Log-Term are Isurace s the dustry s professoal trade orgazato represetg the ato s leadg log-term care surace agets ad brokers. more formato, vst our Webste: Request addtoal copes of ths brochure from your surace professoal, or call (818) m No. S merca ssocato for Log-Term are Isurace. Log-Term are Isurace s Good for merca s protected uder the Trademark laws of the Uted States by Sales reators, Ic.