Underwriting Long-Term Care Insurance | Asset Based Long-Term Care Insurance | Hybrid Life/LTC Insurance & Annuity Care

Every long-term care policy begins with the same question from the insurer: how likely is this person to need care soon, and for how long? Underwriting is how that question gets answered. Because a long-term care claim can run for years, insurers look closely at your health history, your medications, your memory, and your ability to handle everyday activities before they agree to cover you — and the answer shapes both whether you’re approved and what you pay.

The three main ways to buy long-term care protection — a traditional stand-alone policy, an asset-based hybrid built on life insurance, and an annuity with long-term care benefits — each approach underwriting a little differently. Knowing those differences before you apply is one of the simplest ways to avoid a decline.

The three options at a glance

Why underwriting matters

Long-term care underwriting is stricter than most people expect. In Milliman’s 2025 survey of the stand-alone market, 24.3% of applications were declined or deferred in 2024 (excluding one short-duration product with unusually generous underwriting) — and the rate ranged from 15.1% to 34.0% depending on the insurer.¹ That spread is why the carrier you apply to matters almost as much as your health.

A decline can also follow you. The American Association for Long-Term Care Insurance (AALTCI) warns that “a decline from one company could result in automatic declines from others,” because many applications ask whether you’ve ever been turned down.³ The goal is to apply once, to the right carrier, with accurate information.

Traditional long-term care insurance

Brief summary

A traditional (stand-alone) policy is built for one job: paying for qualifying long-term care at home, in assisted living, or in a nursing home once you need help with activities of daily living or have a severe cognitive impairment. You pay ongoing premiums, and in exchange you typically get the largest pool of care benefits per premium dollar. The trade-off is that if you never need care, there’s generally no death benefit or cash value, and premiums on many policies are not guaranteed.

Typical underwriting ages

AALTCI reports that its member insurers “generally offer traditional LTC insurance policies to individuals between 45 and 79,” and that 78% of applicants are between 50 and 69.² Many carriers also stop accepting new applications somewhere between age 73 and 75.¹¹ Milliman found the average issue age for stand-alone sales was 56.1 in 2024 (59.7 when a short-duration product is included), and buyers ages 55–64 made up 45.2% of sales.¹

Underwriting classifications

Most traditional carriers sort approved applicants into a small number of rate classes, though the names vary. A common structure is Preferred (excellent health, often non-smokers within height and weight guidelines), Standard (sometimes called Select, for a few well-managed conditions), and Substandard (higher-risk applicants at a higher price). Not every carrier offers every class, and some make a counteroffer — a higher rate, a smaller benefit, or both.¹¹

The good news: Milliman found that 72.5% of stand-alone policies issued in 2024 landed in the insurer’s best class, 22.9% in the second-best, 4.4% in the third-best, and just 0.2% in a less attractive class (excluding the short-duration product).¹

Industry buyer insights

• Couples dominate. Half of stand-alone buyers (50.1%) were part of a couple in which both partners bought coverage; another 28.5% were one member of a couple, and 21.4% were single.¹
• Women buy more often. Women made up 54.4% of buyers and 63.1% of single buyers.¹
• A declined spouse doesn’t end the plan. When one partner was declined, 70.4% of healthy spouses went ahead and bought coverage.¹
• Price varies widely. AALTCI has found that rates for virtually identical coverage can vary by more than 110% from one insurer to another.²⁰

Declination rates by age

Age is the single biggest driver of declines, because health problems become more common every decade. AALTCI data put the decline rate at 38% for applicants ages 65–69 and 47% for ages 70–74.² Milliman’s industry survey shows the same pattern:

Source: Milliman, 2025 Long-Term Care Insurance Survey (declines by age and placement by age).¹ Milliman notes these figures may understate declines slightly, since many withdrawn applications were headed toward a decline — and that declined applicants sometimes obtain coverage elsewhere.

Most common reasons for declines

A federal study of 55,070 declined applicants found that “no single diagnostic category accounts for more than 15% of declines.”⁹ The leading categories were:

Source: U.S. Department of Health & Human Services (ASPE), A Profile of Declined Long-Term Care Insurance Applicants, based on applications from January 2009 to June 2010.⁹

The reasons also shift with age. In the same study, applicants 70 and older were most often declined for neurological problems and multiple conditions; ages 60–69 most often for diabetes, cancer, and cardiac issues; and those under 60 for bone and musculoskeletal problems, mental health, and autoimmune conditions.⁹ The National Council on Aging adds that current memory problems, existing difficulty with daily activities, a recent heart attack or major surgery, terminal illness, and a history of substance abuse can all lead to a decline or a waiting period.¹⁰

What to expect during underwriting

1. The application. Detailed health questions about diagnoses, treatment, medications, and how you manage daily activities. Accuracy matters — errors can surface later and cause problems at claim time.
2. Records and database checks. In Milliman’s survey, medical records were requested for 89% of applications and prescription profiles were run on 85%.¹
3. A phone interview. Used on about 64% of applications, often with a short memory or cognitive screen (word recall, simple tasks). Older applicants are more likely to have a cognitive component or an in-person assessment; face-to-face cognitive assessments were used on 14% of applications.¹
4. Rarely a medical exam. Paramedical exams and full medical exams were essentially absent from stand-alone LTC underwriting in 2024 (0% of applications).¹
5. A decision. Approval at the rate class applied for, approval with a counteroffer, a deferral (for example, until you recover from surgery), or a decline.

Asset-based / hybrid life & LTC insurance

Brief summary

AALTCI describes linked-benefit policies — also called asset-based or hybrid life and long-term care insurance — as coverage that “provide[s] money for long-term care if you need it. Or, they pay a death benefit to your beneficiary if you don’t max out the long-term care benefits.”⁴ Many are funded with a single premium or a short payment schedule (such as 10 years), and some offer a return-of-premium feature. The Pension Protection Act of 2006 allows tax-favored use of life insurance and annuity values for qualified long-term care, which is part of why these products grew.⁶

Typical underwriting ages

According to AALTCI, “some insurers offer coverage starting at age 30; others only at 40,” and they “can stop accepting applications at age 75; others at 80.”⁴ AALTCI also notes linked-benefit policies “will often go up to age 85.”² As examples, one widely sold single-premium design issues at ages 35–80¹³, and a universal-life design issues at 30–80¹².

Underwriting classifications

Rate classes vary more among hybrid carriers than among traditional ones, because many hybrids underwrite both the life insurance (mortality) and the long-term care benefit (morbidity). Examples from carrier materials:

• One universal-life hybrid uses just two classes for its care rider: Standard and Couples Discount.¹²
• One single-premium whole-life design is medically underwritten, and applicants “must be in average or better health to qualify.”¹³
• Life policies that add a long-term care rider may use Preferred, Nontobacco, and Tobacco classes, with table ratings (for example, up to Table D) for non-preferred risks.¹⁴

A mistaken belief worth correcting: AALTCI stresses that hybrid policies were not created for people who can’t otherwise qualify for traditional coverage — you still need to “health qualify,” though some designs use simplified underwriting.⁵

Industry buyer insights

• Hybrids now outsell stand-alone policies. Milliman estimates life+LTC hybrid sales reached the 100,000–150,000 range in 2024, compared with roughly 40,000 stand-alone LTC policies.⁸ AALTCI likewise reports that “the majority of consumers are purchasing linked-benefit policies.”²
• Linked-benefit sales are growing fast. Among 11 insurers reporting to Milliman, linked-benefit policies rose 90.9% in 2024 to 31,838 policies, with an average individual annual premium of $9,504.¹
• The worksite is a big channel. 64% of combination coverages were sold at the worksite (26% of premium), where guaranteed-issue options appeal to older employees.¹
• Individual buyers skew older and are more likely to choose a 10-year payment schedule.¹

Declination

Industry-wide decline rates for hybrid products are not published the way stand-alone figures are — Milliman notes it does not receive statistical breakdowns for combination sales.¹ In practice, hybrids decline for the same kinds of care-related conditions listed above, plus conditions that affect life expectancy, since the insurer is also pricing a death benefit. Some carriers rate the care rider separately from the life policy — for example, allowing table ratings for non-preferred risks, but not offering the rider at all when the base life policy is rated beyond a set limit.¹⁴

Most common reasons for declines

• Cognitive impairment, memory complaints, or a dementia diagnosis
• Current need for help with activities of daily living, or use of a wheelchair, walker, or other medical equipment
• Neurological conditions such as Parkinson’s disease, multiple sclerosis, or a recent stroke or TIA
• Recent or active cancer treatment, heart conditions, or poorly controlled diabetes
• Conditions that shorten life expectancy (which matter more here because of the death benefit)
• Multiple conditions combined, or medications associated with excluded conditions

Based on the decline categories reported by ASPE and NCOA.^9,10 Each carrier’s guidelines differ.

What to expect during underwriting

• A phone interview is common: one carrier notes “most applicants can qualify by participating in a brief telephone interview,” though a medical exam may be required “depending upon age and face amount.”¹³
• Simplified designs may require no medical exam and typically don’t obtain medical records; a telephone interview with a nurse is usually sufficient.⁵
• Requirements step up with age. One carrier’s care rider, for example, relies on prescription and MIB checks under 60, adds a phone interview with a cognitive screen at 60–69 (and medical records at 66–69), and requires a face-to-face assessment at 70–75.¹⁴
• Funding and paperwork. If you’re repositioning a CD, annuity, or life policy (for example, through a 1035 exchange), expect transfer paperwork alongside the health review.

Annuity care (annuity + long-term care)

Brief summary

An annuity with long-term care benefits pairs a deferred annuity — usually funded with a single deposit, sometimes from an existing annuity — with a pool of long-term care benefits that can be larger than the deposit itself. If care is never needed, the annuity value remains for you or your heirs. Designs include single-premium deferred annuities with continuation-of-benefit features, fixed annuities linked to long-term care coverage, and fixed index annuities with long-term care benefits.^15,17,18

Typical underwriting ages

Issue ages commonly run from about 40 to 80, and some designs accept applicants up to 85. As examples, one annuity-care product issues at a minimum age of 40 and a maximum of 80 (age last birthday), while the same carrier’s related annuity-care versions can be written up to age 85.^15,16

Underwriting classifications

Classes vary by carrier. One fixed index annuity with long-term care coverage assigns a Preferred, Standard, or Secure class — the class sets the level of care benefits — and applicants may skip the evaluation entirely by accepting the most conservative (Secure) class.¹⁸ Other designs use a simple approve-or-decline decision.

Industry buyer insights

• A small but rising segment. Milliman reports annuity-LTC sales in the low thousands of contracts per year through 2024, with average deposits of about $130,000 to $140,000 — and a trajectory it describes as “meaningfully upward.”⁸
• A path for the less insurable. Milliman notes that annuity LTC products “generally feature more streamlined underwriting requirements,” and some carriers position them for clients who don’t meet the underwriting threshold for a life/LTC policy.⁸
• Limited availability. AALTCI has noted that relatively few insurers offer annuity-based long-term care designs.⁷

Declination

Because the insurer is underwriting only the likelihood of care — not a death benefit — annuity care is generally the most forgiving of the three options. One design, for example, reports a 100% acceptance rate for qualified applicants, using a lower benefit class rather than a decline.¹⁸ Declines still happen, most often when an applicant already needs care or shows signs of cognitive decline at application.

Most common reasons for declines

• Currently needing help with two or more activities of daily living (bathing, dressing, eating, toileting, transferring, continence)
• A diagnosis of, or current symptoms of, cognitive impairment such as Alzheimer’s disease or other dementia
• Current nursing home, assisted living, or home health care, or a recent recommendation for it
• Progressive neurological conditions or terminal illness

These mirror the benefit triggers these products pay on — insurers screen out applicants who already meet them.^15,10

What to expect during underwriting

• Health questions and a short interview. One carrier describes its annuity-care underwriting as “several health questions on the application and a brief telephone interview. No medical exams are necessary.”¹⁵
• Cognitive screening at older ages. Another carrier bases approval on application questions plus a cognitive screening for applicants 70 and older.¹⁷
• Online or video evaluations. Some newer designs use an average 30-minute online video interview that checks cognitive and physical abilities, with no medical records required.¹⁸

How to prepare before you apply

• Apply while you’re healthy. Decline rates rise sharply after 60, and AALTCI suggests comparing costs 30 to 60 days before a birthday to lock in the lower age rate.²⁰
• Let a professional “shop your health.” AALTCI recommends that anyone with existing conditions or multiple prescriptions work with an independent broker who can compare how several insurers view those conditions before you apply.²
• Gather your details. Have a list of doctors, diagnoses with dates, current medications and dosages, and any recent tests or surgeries ready.
• Consider timing around treatment. If you’re recovering from surgery or starting a new treatment, waiting until you’re stable may avoid a deferral.
• Match the product to your health and assets. If traditional underwriting looks difficult, a hybrid or annuity-care design may still be available — and if one spouse is declined, the other can often still buy coverage.¹