Long-term care is a problem that affects practically every household, with about 70% of adults reaching 65 today requiring it at some time in their lives. Furthermore, not everyone uses long-term care insurance to assist cover the costs, even though many people will be impacted by the need for long-term care.

However, the cost of long-term care is high, and many people cannot afford to pay for it all out of pocket. Extended daily care is not covered by traditional employer-based health insurance, and health insurance often only covers hospital and doctor expenditures. The costs associated with long-term care requirements may be partially covered by long-term care insurance.

What is Long Term Care Insurance?

Benefits from long-term care insurance may cover necessities or activities of daily living, giving you the option to stay in your own home or choose where you will get care. This type of coverage can help prevent the depletion of your assets and prevent you from placing financial and caregiving strain on family members.

Long-term care insurance policies vary based on their terms, but many of them work in similar ways. Typically, a policyholder experiences a triggering event that allows them to claim on their policy. The triggers may differ among policies but commonly include the need for assistance with two or more activities of daily living, such as bathing, dressing, eating, toileting, transferring (from bed to a chair, for example), and ambulating (moving around). 

Once the policyholder is approved to use their long-term care insurance benefits, they may claim care services and receive reimbursement. Many policies pay a daily maximum amount, and the policyholder continues to claim to receive the reimbursement. The benefits can cover a wide range of services and various residential settings.

How Much is Long Term Care Insurance?

Pricing will depend on factors such as your age, gender, health status, and the level of coverage the policy will pay out if you need to use it.

It’s better to purchase a long-term care insurance policy when you’re still in good health — generally in your 50s — than to wait until you’re ill or older, when it may become unaffordable. The younger you are, the lower your premiums will be.

To give you an idea, the American Association for Long-term Care Insurance finds that a couple who opt for an initial policy benefit of $165,000, both age 55, will pay an annual premium of $2,080 combined. For a couple both age 65, the premium would rise to $3,750 per year.

These six factors can help you determine whether long-term care insurance is something you should pursue as you plan your financial future.

1. Long-term care insurance covers care in a variety of settings.

When people think of long-term care, most think of nursing homes. However, 73% of people who receive long-term care are at home, not in assisted living facilities or nursing homes.

Long-term care is needed when someone can’t perform daily activities such as dressing, eating, bathing, or transferring – and this help can often be provided in your own home through a professional home health aide. Though it’s not necessarily pleasant to think of scenarios where long-term care will be needed, long-term care insurance can help cover the costs. It may offer a way for you to receive care in your own home instead of in an assisted living or nursing home.

2. Long-term care insurance can help fill in caregiving gaps.

It’s impossible to know for sure if your family would be able to care for you if long-term care becomes necessary. Caregiving can be a huge financial and emotional burden. And because of the high cost of long-term care, 66% of caregivers end up using their own retirement and savings funds to pay for care. Plus, the logistics of caregiving might not be feasible if your family members live far away or can’t square it with work or family obligations of their own. 

3. Long-term care insurance covers more healthcare costs than Medicare.

Medicare does not generally cover long-term care and will only pay for care at home under very limited circumstances.

While Medicare may cover short-term skilled care in a nursing home for short periods after a hospital stay (up to 100 days), it does not provide long-term custodial care. Long term care insurance can help cover expenses that Medicare does not.

4. It’s likely you’ll need some form of long-term care.

As previously stated, 65-year-old today has a 70% chance of needing long-term care services at some point during their lifetime. Because long-term care can be needed for many different reasons, it’s difficult to know if you’ll need it or not.

5. Your savings may not be enough to cover your long-term care needs.

There are various types of long-term care, from help with daily chores and activities to full care in a private nursing home room. The average assisted living facility costs over $64,000 per year, and the average nursing home costs over $104,000 per year for a semi-private room. What’s more, these costs are projected to more than double by 2053.

With costs for long-term care on the rise, your retirement savings may not be big enough to cover these expenses.

6. There are several type of long-term care insurance policies available.

A typical, traditional long-term care insurance policy will pay a predetermined amount for each service — for instance, $100 a day for nursing home care. There generally will be a limit to the benefits you receive, either based on a number of years or a dollar amount. A plan that offers pooled benefits (meaning it covers more than one type of long-term care service) will set a total dollar amount for the various services you receive.

Read Also: How to File an Insurance Claim: A Step-by-Step Guide

New types of long-term care insurance policies are growing in popularity, extending beyond the traditional “use it or lose it” type, many of which have experienced premium increases.

One alternative is hybrid life and long-term care insurance. This type of policy combines long-term care insurance with permanent life insurance and provides more options:

• If you need long-term care, you can tap the policy benefit.
• If you die before needing long-term care, the policy has a life insurance benefit.
• If you decide you need the money for something else, you can typically receive a cash value that can be roughly equal to or less than the total premiums paid.
• Contract terms and premiums are guaranteed not to change.

Another alternative is a universal life insurance policy with a long-term care insurance rider. This option might be right for you if you’re interested in a meaningful death benefit for your beneficiaries in the event long-term care insurance isn’t needed.

The Benefits of Long-term Care Insurance for Seniors

Let’s see how having a long-term care insurance policy like this can help you:

You can customize your options of a LTC insurance policy

Many long-term care insurance policies provide a great deal of flexibility and customization options. Individuals can shop for a policy through various providers and tailor their coverage based on their needs, preferences, and budget. Among the customizable options available in long-term care insurance policies are the duration of coverage, daily benefit amounts, elimination periods, and additional riders or features to enhance the policy. This flexibility allows a person to create a plan that aligns with their unique lifestyle and personal circumstances, providing the desired level of protection.

Cover your future needs with LTC insurance

These policies often include provisions for early access to care. Some offer benefits for home modifications, caregiver training, or preventive care services to help individuals proactively manage their health and reduce the risk of requiring more extensive care in the future. This emphasis on early intervention and prevention promotes overall wellness and can potentially delay or minimize the need for costly long-term care services.

Use LTC insurance to pay for senior care at a reasonable price

With long-term care insurance coverage, especially if purchased at the ideal age of mid-50s to 60s, individuals can often benefit from more affordable premiums and secure more comprehensive coverage. 

Policyholders are also protected from the rising costs of long-term care services. Long-term care insurance rates typically are locked in at the time of purchase, shielding individuals from inflation and increasing care costs that may occur over time.

Preserve inheritance for future generations with LTC insurance

One of the primary advantages of long-term care insurance is the financial security it provides the covered individual and their family. The costs of long-term care services can add up quickly, placing financial hardship on all but the most affluent individuals. Enrollment in a long-term care insurance policy provides a strategy to limit the financial risk associated with senior care expenses and transfer it to the insurance provider. The policy pays for qualified care services, allowing policyholders to protect their assets, savings, and retirement funds from being rapidly depleted, all while getting the care they need.

Paying for long-term care can leave a person little to pass on to heirs. Long-term care insurance protects the estate and ensures that the intended beneficiaries receive the inheritance that the policyholder has carefully planned and accumulated over their lifetime.

LTC covers costs no matter where you live

With long-term care insurance, policyholders gain access to high-quality care from a network of preapproved providers with the flexibility to receive that care where they want, whether at home, in an assisted living facility, or in a nursing home. With the choice of where to receive care, long-term care insurance empowers seniors to age according to their preferences, preserving their dignity and quality of life.

Many older adults enjoy the multitude of benefits that assisted living communities provide, from having social connections with peers to living a low-maintenance lifestyle. Long-term care insurance gives policyholders more opportunity to offset some of the costs associated with senior living communities so they can enjoy all that assisted living offers. 

Give yourself and your family peace of mind

Having long-term care coverage not only benefits the policyholder but also provides relief for their family and loved ones. It reduces the financial and emotional burden on family members who may otherwise have to bear the responsibility of providing care or managing care expenses. This important benefit preserves family relationships, eliminating the potential strain on loved ones due to differing opinions on pathways to care and their associated costs. 

Long-term care insurance can foster peace of mind, creating a sense of security and alleviating the stress of navigating complex health care decisions. As a result, families can focus on providing emotional support for their loved ones and spending quality time together.

Long-term care insurance is essential to senior care planning

Long-term care insurance offers many benefits that go beyond financial protection. It ensures individuals have access to quality care, preserves independence and dignity, relieves the burden on family members, safeguards inheritance, and provides peace of mind for the future. By carefully considering one’s long-term care insurance needs and exploring the available options, individuals can secure their future and protect themselves and their loved ones from the potential financial strain of long-term care expenses.

Top Long-term Insurance Providers

When shopping for long-term care insurance, it’s important to consider the reputation of the provider, premium costs, and, perhaps most importantly, how you’ll receive your plan’s benefits once you do need care. Here’s a list of popular long-term care insurance providers, plus a description of how they address consumers’ common concerns.

1. Mutual of Omaha

A leader in the long-term care insurance space, Mutual of Omaha is a solid choice for people who aren’t sure if they’ll need long-term care in the future. The company offers numerous discounts, one of the widest ranges of policy riders, and an easy-to-use rate calculator on their website.

2. Brighthouse Financial

Brighthouse, a spinoff of MetLife, is relatively new to the insurance marketplace. But, it has quickly become a standout for offerings such as annuities and life insurance. The company’s plans are hybrid, meaning they blend a life insurance policy with long-term care coverage. The need for care can arise quickly and unexpectedly, and Brighthouse has earned a reputation for helping clients speed up the payment process. Most applicants can expect a decision within a day, labs and exams are waived for some clients, and many reviewers have noted that they received payouts quickly.

3. Lincoln Financial Group

Lincoln is notable for having no elimination period, which can greatly reduce the time to payout (other providers’ elimination period can require you to pay out of pocket for 90 days or more). As with many other providers now, Lincoln’s long-term care plan policies are hybrid. Lincoln’s reviews also note that the company often pays within three days of a claim.

4. Bankers Life

Seniors interested in flexibility can find a range of customizable features at Bankers Life. They offer tax-qualified plans, meaning policyholders can deduct policy premiums as a medical expense and receiving benefits is income tax free. This isn’t a guaranteed benefit for long-term care insurance policies. If your loved one knows they want to receive care in a senior living community, Bankers Life offers a facility-only policy. It helps covers long-term care costs at assisted living and memory care communities. Or, seniors can choose a comprehensive policy that allows them to choose where they want to receive care when they eventually need it.

5. National Guardian

Not all long-term care insurance providers offer lifetime benefits, but National Guardian does. While the policy typically comes with a two- or three-year benefit period, you can choose to add a benefit period extension rider for a lifetime benefit period. National Guardian also offers a joint policy and premium for senior couples that’s similar to what you would pay for an individual policy.

6. New York Life

New York Life offers three long-term care insurance plans: a cost-conscious policy, a traditional policy, and a hybrid policy that combines long-term care and life insurance. While some plans can be expensive, many clients find that the company’s reliability is worth the cost. New York Life provides a money-back guarantee for unused benefits on some policies. Clients also have the option to combine policies, which means one renewal date, one phone number to call, and one representative ready to take care of your needs.

7. Nationwide

Nationwide offers flexible long-term care insurance policies. Those with an existing life insurance policy can add a long-term care rider to their plan. Recognizing that the use-it-or-lose-it nature of long-term care insurance can be off-putting to some customers, Nationwide offers plans with a death benefit that pays out when the insured dies. A policyholder is also guaranteed to receive 100% of their full monthly benefit at the time of a claim, and no receipts or bills are required. They also pay benefits if you opt to use an informal caregiver, such as a family member — something many policies don’t allow for.

8. Genworth Financial

Genworth is a well-established financial services company that now focuses on mortgage and long-term care insurance products. They remain a competitive insurer of couples and offer policies that allow benefit sharing if one partner needs more care than the other.