Long-Term Care Insurance: Is It Worth It?
About 70% of people over 65 will need some form of long-term care. Without insurance, the average lifetime cost exceeds $100,000 â paid entirely out of pocket. Here is everything you need to know about LTC insurance.
How Long-Term Care Insurance Works
Long-term care insurance pays a daily or monthly benefit when you can no longer perform certain activities of daily living (ADLs) independently â typically when you need help with at least 2 of 6 activities: bathing, dressing, eating, toileting, transferring (moving from bed to chair), and continence.
Once you qualify for benefits, there is usually a waiting period (the elimination period, typically 90 days) before the policy begins paying. After that, the policy pays up to your daily or monthly benefit amount for the duration of your benefit period.
Key Policy Components
Daily/Monthly Benefit
The maximum amount the policy pays per day or month for care. Common amounts range from $150-$350/day ($4,500-$10,500/month).
Our Tip: Match this to the average assisted living cost in your state. Use our cost calculator to find your local median.
Benefit Period
How long the policy will pay benefits. Options typically range from 2 years to unlimited (lifetime). The most common choice is 3-5 years.
Our Tip: The average length of care needed is about 3 years. A 3-5 year benefit period covers most situations while keeping premiums manageable.
Elimination Period
The waiting period before benefits start (similar to a deductible). Options range from 0-180 days, with 90 days being most common.
Our Tip: A 90-day elimination period significantly lowers premiums. Ensure you have savings to cover 3 months of care out-of-pocket.
Inflation Protection
Increases your benefit amount over time to keep pace with rising care costs. Options include 3% or 5% compound growth, or a future purchase option.
Our Tip: Compound inflation protection is the most valuable feature, especially if you buy young. Care costs have historically risen 3-5% per year.
Type of Care Covered
Most modern policies are comprehensive, covering nursing homes, assisted living, memory care, home care, and adult day care.
Our Tip: Avoid policies that only cover nursing home care. Home care and assisted living are far more common than nursing homes.
Average Annual Premiums by Age
These are typical annual premiums for a policy with $150/day benefit, 3-year benefit period, 90-day elimination period, and 3% compound inflation protection.
| Age at Purchase | Single Applicant | Couple (Both) | Notes |
|---|---|---|---|
| 45 | $1,000â$1,800/yr | $1,600â$2,800/yr | Best rates; health screening easier |
| 50 | $1,200â$2,200/yr | $2,000â$3,600/yr | Still affordable; good selection |
| 55 | $1,500â$3,500/yr | $2,500â$5,500/yr | Sweet spot for most buyers |
| 60 | $2,500â$5,000/yr | $4,000â$8,500/yr | Premiums rising; act soon |
| 65 | $3,500â$7,500/yr | $6,000â$12,000/yr | Expensive; may face health denials |
| 70+ | $5,000â$15,000+/yr | $9,000â$25,000+/yr | Very expensive or unavailable |
Important: These are typical ranges. Your actual premium depends on your health, the insurance company, your state, and the specific policy features you choose. Couples can often save 25-40% with shared benefit or shared care policies.
Traditional vs. Hybrid Policies
Traditional LTC Insurance
Hybrid (Life + LTC)
Should You Buy LTC Insurance?
LTC insurance is not right for everyone. Your decision depends on your financial situation, age, health, and family circumstances.
Good Candidate If:
- âYour assets are between $200K and $2M (enough to protect, not enough to self-insure)
- âYou are age 50-65 and in good health
- âYou have a family history of longevity or chronic conditions
- âYou want to protect assets for a spouse or leave an inheritance
- âYou can afford premiums comfortably without financial strain
- âYou want to preserve choice about where and how you receive care
May Not Need If:
- âAssets under $100K (Medicaid will likely cover care)
- âAssets over $3M (you can likely self-insure)
- âYou are already over 75 (premiums are extremely expensive)
- âYou have existing health conditions that will likely cause denial
- âPremiums would create financial stress
- âYou have a spouse who can provide care and other family support
What If You Never Bought LTC Insurance?
If your loved one is already in their 70s or 80s and never purchased a policy, it is probably too late to buy one. But there are still meaningful ways to plan for and pay for care.
Calculate Your Savings Runway
Use our free savings runway calculator to determine how many months your current savings can cover care costs. This gives you a realistic picture of your financial position.
Calculate Savings RunwayâCheck Medicaid Eligibility
Medicaid covers assisted living in many states through waiver programs. Eligibility depends on income and assets, and planning ahead can help you qualify when the time comes.
Check Medicaid EligibilityâExplore VA Benefits
If your loved one is a veteran or surviving spouse, the Aid & Attendance benefit can provide up to $2,431/month toward senior living costs.
VA Benefits GuideâConsider Home Equity
For many families, the home is the largest asset available to fund care. Options include selling, renting, or reverse mortgages.
Home Equity OptionsâLook Into Tax Deductions
Senior living costs may be tax-deductible as medical expenses. The deduction threshold is 7.5% of adjusted gross income, and many care costs qualify.
Tax Deductions GuideâCompare Care Types by Cost
Different care settings have dramatically different costs. Home care, assisted living, and memory care vary by thousands per month. Choosing the right level of care matters.
Compare CostsâHow Long Will Your Savings Last?
Whether you have LTC insurance or not, our free savings runway calculator shows exactly how long your current resources can fund care.