Buying Long-Term Care Insurance: A Comprehensive Guide

Shawn Plummer

CEO, The Annuity Expert

Making the right decisions regarding our future can often be a daunting task. The journey might seem overwhelming, especially regarding safeguarding our health and well-being in our golden years. One such significant decision revolves around buying long-term care insurance. This guide aims to shed light on this insurance’s essential aspects, enabling you to make a more informed choice.

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Understanding Long-Term Care Insurance

Long-term care insurance is designed to cover costs associated with assistance in daily activities like eating, bathing, or dressing, which isn’t usually covered by regular health insurance or Medicare. So, the first question that might pop into your mind is: “Is long-term care insurance worth it?

The answer lies in the understanding that aging and potential health issues are a reality we must all confront. Investing in long-term care insurance is a strategic move to protect your savings and provide quality care should you need it later in life. However, like every other decision, this has pros and cons.

Buying Long-Term Care Insurance

What Could Disqualify You from Long-Term Care Insurance?

Knowing the potential roadblocks is essential before diving into the intricacies of buying long-term care insurance. Age and health are two primary factors. The older you are or the more serious pre-existing conditions you have, the more complex and expensive it might be to qualify. In addition, insurers typically use medical underwriting to assess your risk level, meaning chronic conditions such as Alzheimer’s or Parkinson’s disease could disqualify you.

Buying Long-Term Care

Assessing the Worth of Long-Term Care Insurance

Purchasing long-term care insurance is a personal decision based on your financial situation, age, health status, and family support system. Therefore, its worth varies from person to person. But, as a rule of thumb, if you have significant assets you want to protect or if you want to secure better care options, this insurance can be a worthy investment.

The Biggest Drawback of Long-Term Care Insurance

While it has many benefits, the biggest drawback of long-term care insurance is its cost. The long-term care insurance cost by age can be high, and premiums can increase over time. However, you can use a long-term care insurance cost calculator online to estimate potential expenses.

Four Reasons People May Purchase Long-Term Care Insurance

  • Asset Protection: Long-term care can be expensive. Having insurance means your savings won’t be depleted to cover these costs.
  • Quality Care: Insurance can provide access to better care facilities or home care services.
  • Independence: With insurance, you may not need to rely on family members for care.
  • Peace of Mind: Knowing you have a plan in place provides psychological comfort.

Let’s consider an example. Suppose Mrs. Jones is a 60-year-old woman with a considerable estate. She wants to ensure that even if she requires care in the future, her assets will not be significantly reduced. In this case, buying long-term care insurance can be a prudent decision.

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The Cost of Long-Term Care Insurance

The cost varies widely depending on your age, health, the amount of coverage you want, and the insurance company. However, it can range from $1,500 to $5,000 yearly. Therefore, it’s essential to use a long-term care insurance cost calculator and consult a financial advisor to understand the potential impact on your finances.

When Should I Buy Long-Term Care Insurance?

It’s generally recommended to purchase this insurance in your mid-50s to early 60s, as premiums are more affordable and the chances of qualifying are higher. However, it depends on individual circumstances and financial capabilities.

Next Steps

In conclusion, buying long-term care insurance is a significant decision that requires careful consideration. First, you must assess your current health, age, financial situation, and such an investment’s potential benefits and drawbacks. As we’ve outlined, the cost can be a significant factor, especially since premiums tend to rise with age. A long-term care insurance cost calculator can help you understand these expenses better.

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Frequently Asked Questions

Does Long-Term Care Provide Death Benefits?

No, long-term care insurance does not provide death benefits. Instead, its primary purpose is to cover the costs of care services (like nursing home or home health care) for individuals who cannot perform certain Activities of Daily Living (ADLs) due to aging, illness, or disability.

How Does Medicare Help With Buying Long-Term Care Insurance?

Medicare does not directly assist with buying long-term care insurance. It primarily covers short-term acute care services but not long-term custodial care. Some Medicare Advantage plans may offer limited long-term care benefits, but it’s generally advised to consider separate long-term care insurance for extensive coverage.

How Does Long Term Care Cover The Cost For Veterans

The U.S. Department of Veterans Affairs (VA) offers long-term care benefits to eligible veterans through programs such as the Aid and Attendance benefit, Veterans Directed Care, and the VA’s standard medical benefits package. These programs can cover or offset the costs of services like nursing homes, assisted living, home health care, and adult day care for qualifying veterans.

Does Long-Term Care Insurance Cover Assist Living?

Yes, long-term care insurance typically covers assisted living. Policies generally pay for services when the insured person can’t perform a certain number of Activities of Daily Living (ADLs), like bathing or eating, or has cognitive impairments. Benefits can be used for care in various settings, including assisted living facilities, nursing homes, and the individual’s home.

How Do You Protect Your Retirement Nest Egg With Long-term Care Insurance?

Long-term care insurance helps protect your retirement savings by covering the potentially high costs of long-term care services, such as nursing homes, assisted living, or home health care. Without it, you might need to deplete your nest egg to pay for these services. This insurance is a financial safety net, ensuring your retirement savings are used for your intended lifestyle, not unplanned medical expenses.

What’s a Long-Term Care Insurance Elimination Period?

A long-term care insurance elimination period, often called a “waiting” or “deductible” period, is when an individual becomes eligible for benefits due to a qualifying condition, and the insurance company starts paying for covered services. Usually measured in days, this period must be met before policy benefits are paid out. It’s similar to a deductible in other types of insurance.

When should I consider buying long-term care insurance?

Consider buying long-term care insurance in your mid-50s to early 60s, when premiums are most affordable, and the chances of qualifying are higher.

What disqualifies from long-term care insurance?

Age and pre-existing health conditions can disqualify you from long-term care insurance. Chronic conditions like Alzheimer’s or Parkinson’s disease could lead to rejection by insurers.

What does long-term care insurance cover?

Long-term care insurance covers costs related to assistance with daily activities, such as eating, bathing, or dressing, typically not covered by regular health insurance or Medicare.

How does long-term care insurance work?

Long-term care insurance works by paying a set amount per day for your care when you cannot perform certain activities of daily living due to a chronic illness or disability.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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