Don’t Let Your Long-Term Care Insurance Lapse

The median annual price of a private room in a nursing home is over $90,000, according to Genworth Financial. Many people attempt to defray these exorbitant costs by purchasing long-term care insurance. But here is something that may blow your mind – more than a third of people with long-term care insurance policies at age 65 let their coverage lapse before they pass on, without reaping the benefits the policy may offer, according to Specifically, men and women at age 65 have a 32 percent and 38 percent chance of lapsing prior to their death.

Understand, when you coverage lapses, you effectively forfeit all of your insurance benefits.

Even worse – Lapses in long-term care coverage are quite common among policy holders who are impaired. This makes sense considering these individuals may not even be aware they failed to pay their premiums.

The study also found that low income individuals were at a greater risk of lapsing, likely due to the tighter squeeze on their finances as they age.

Once You Lapse, Getting Coverage Is Extremely Difficult

Trying to purchase a new insurance policy after a long-held policy lapses can be problematic, if not impossible. The new premiums will likely be much higher, you might be turned down for coverage and the benefits almost certainly won’t be as generous as those of policies sold years ago. In fact, over 25 percent of long-term insurance applicants age 60 to 69 and 45 percent of applicants who are over 70 were rejected for long-term care insurance for health reasons.

Many companies in the long-term care insurance industry do have some safeguards in place to ensure premiums get paid. For example, they allow policyholders to ask for premium notices to be sent to a trusted friend or relative. However, this is optional, not mandatory.


If your parents, spouse or close relative has a long-term care policy, there needs to be a plan in place for another party to receive notices that long-term care insurance premiums are due to ensure the premiums are paid.

On the same note, if you have a long-term care insurance policy, you need to find someone who you trust who you can designate to receive premium notices on your behalf and ensure the premiums get paid.

“Everyone should have a plan in place,” said Anthony Webb, a senior research economist at the Center for Retirement Research and one of the co-authors of the study.

Take the time to sit down and talk with your estate planning attorney about your long-term care needs and policy options.