Thinking About Buying Long-Term Care Insurance? Here’s What You Need to Know

Shawn Plummer

CEO, The Annuity Expert

Like most people, you probably don’t want to think about needing long-term care one day. But the fact is, it’s a possibility for all of us, and if that day comes, you’ll be glad you have long-term care insurance. This guide will discuss long-term care insurance, who needs it, and how to buy it. We’ll also answer some common questions about long-term care insurance so that you can make an informed decision about whether or not to purchase it.

Why Should You Buy Long-Term Care Insurance?

Long-term care insurance can be a valuable financial planning tool for individuals concerned about the cost of necessary medical and personal care in the event of a chronic illness, disability, or cognitive impairment. In addition, some people buy long-term care insurance to help protect their savings and assets from being depleted by the high cost of long-term care, which can include in-home care, assisted living, or nursing home care.

A few other reasons you might want to consider include helping cover the cost of long-term care; Long-term care can be expensive and not covered by traditional health insurance or Medicare. However, a long-term care insurance policy can help pay for necessary medical and personal care costs in various settings, depending on the policy terms.

Next is to maintain independence; long-term care insurance can help you maintain your independence and remain in your home or a preferred living environment rather than being forced to move to a nursing home or other facility to receive care. Finally, it provides peace of mind; Long-term care insurance can provide peace of mind to you and your family members by helping to ensure that you have the financial resources to pay for necessary care if the need arises.

When Is The Best Time To Buy Long-Term Care Insurance?

The best time to buy long-term care insurance is generally when you are younger and in good health, as premiums tend to be lower for younger applicants and may increase significantly as you age or develop certain health conditions.

That being said, there is no one-size-fits-all answer to this question, as the right time to buy long-term care insurance will depend on your circumstances and financial situation. However, here are a few factors to consider when deciding when to buy long-term care insurance:

  • Age: As mentioned, premiums tend to be lower for younger applicants. However, you may also face more stringent underwriting if you apply for coverage at a younger age.
  • Health: As with most types of insurance, your health can significantly impact the cost and availability of long-term care insurance. If you have certain preexisting health conditions, you may be charged a higher premium or be denied coverage altogether.
  • Financial situation: Long-term care insurance can be expensive, and you’ll need to consider whether you can afford the premiums and still meet your other financial goals. If you have significant savings and assets, you may be more comfortable self-insuring and paying for long-term care out of pocket if the need arises.
  • Family history: If you have a family history of chronic illnesses or disabilities requiring long-term care, you may want to consider buying long-term care insurance at an earlier age.

It’s generally a good idea to start thinking about long-term care insurance in your 50s or 60s when you are more likely to be in good health and have a better sense of your financial situation.

What Are The Advantages And Disadvantages When Buying Long-Term Care Insurance?

Long-term care insurance can help cover the cost of necessary medical and personal care for individuals who cannot perform certain activities of daily living, such as bathing, dressing, and eating, due to a chronic illness, disability, or cognitive impairment. Here are some potential advantages and disadvantages to consider when deciding whether to purchase long-term care insurance:

Advantages:

  • Can help pay for care in a variety of settings, including at home, in an assisted living facility, or in a nursing home
  • It can help protect savings and assets from being depleted by the high cost of long-term care
  • May offer tax benefits, depending on your situation

Disadvantages:

  • Premiums can be expensive, especially for older applicants or those with certain preexisting conditions.
  • Coverage may not be available or maybe more costly for those with certain health conditions.
  • There is no guarantee that the policy will cover all of the costs of long-term care, and there may be limits on the amount of coverage provided
  • Policies can be complex and may have exclusions, limitations, and other fine print that can be difficult to understand
  • The long-term care insurance market has undergone significant changes in recent years. As a result, some insurers have exited the market or significantly scaled back their offerings, making it more difficult to find a policy that meets your needs and budget.

How Much Coverage Do I Need When Buying Long-Term Care Insurance?

When buying long-term care insurance, you must consider how much coverage you will need for the type and level of care you may need. Unfortunately, there is no one-size-fits-all answer to this question, as the amount of coverage you need will depend on your circumstances and financial situation.

There are a few factors to consider when determining how much coverage you need, including the type and level of care consider the type and level of care that you may need in the future, including in-home care, an adult day care center, a residential care facility, human services, a medical alert system, nursing home care, and other services.

The cost of long-term care can vary significantly depending on the type and level of care required and the location.

  • Length of coverage: Determine how long you want your policy to provide coverage. Some guidelines have a maximum benefit period of a few years, while others have an unlimited benefit period. Remember that the longer the benefit period, the higher the premium is likely to be.
  • Inflation: Consider the impact of inflation on the cost of long-term care. Long-term care costs are likely to increase over time, and you’ll want to ensure that your policy provides enough coverage to cover the anticipated cost of care. Some long-term care insurance policies offer inflation protection to help keep pace with the rising cost of care.

Other sources of funds: Consider any other sources that you may have available to pay for long-term care, such as savings, investments, or a home equity line of credit. You’ll want to ensure you have enough coverage to fill gaps between the cost of care and your available funds.

How Much Should I Expect To Pay For Long-Term Insurance Coverage?

The cost of long-term care insurance can vary significantly depending on various factors, including your age, health, the type and level of coverage you choose, and the length of the benefit period. Generally, younger applicants and those in good health will pay lower premiums. In comparison, older applicants or those with certain preexisting health conditions may pay higher premiums or be denied coverage altogether.

As a rough estimate, you might expect to pay anywhere from $1,500 to $5,000 per year for a long-term care insurance policy, depending on the policy terms and your circumstances. However, it’s essential to remember that these estimates are just that – estimates – and your actual premiums may be higher or lower depending on your specific situation.

It’s also worth noting that long-term care insurance premiums can increase over time, exceptionally if you choose a policy with an inflation protection rider that helps keep pace with the rising cost of care.

How Does The Federal Government Insurance Program Help Pay For Long-Term Care?

The federal government provides programs to help pay for long-term care, including Medicaid and the Department of Veterans Affairs (VA) benefits.

Medicaid is a joint federal and state program that provides health coverage to low-income individuals and families, including those who are elderly or have disabilities. In addition, Medicaid can help pay for long-term care in various settings, including at home, assisted living facilities, or nursing homes. However, Medicaid has strict eligibility requirements, and you must meet certain income and asset limits to qualify.

The VA provides many benefits to military veterans, including those who are elderly or have disabilities. These benefits can include health care, disability compensation, and pension payments. The VA also offers an Aid and Attendance benefit, a tax-free monetary allowance paid to veterans and surviving spouses who need assistance with daily activities such as bathing, dressing, and eating. In addition, the Aid and Attendance benefit can be used to pay for long-term care in various settings, including at home, an assisted living facility, or a nursing home.

Are There Any Discounts Available For Purchasing Long-Term Care Insurance?

There are a few types of discounts that you may be able to take advantage of when purchasing long-term care insurance, depending on your circumstances and the policy terms:

What Are Some Factors You Should Take Into Consideration When Buying Long-Term care Insurance?

There are several factors that you should take into consideration when buying long-term care insurance, including:

  • Your age: Age can impact the cost and availability of long-term care insurance. Premiums tend to be lower for younger applicants, but you may also face more stringent underwriting if you apply for coverage at a younger age.
  • Your health: Health can significantly impact the cost and availability of long-term care insurance. If you have certain preexisting health conditions, you may be charged a higher premium or be denied coverage altogether.
  • The type and level of coverage you need: Consider the type and level of care you may need in the future, including in-home care, assisted living, or nursing home care. The cost of long-term care can vary significantly depending on the type and level of care required and the location.
  • The length of the benefit period: Determine how long you want your policy to provide coverage. Some guidelines have a maximum benefit period of a few years, while others have an unlimited benefit period. Remember that the longer the benefit period, the higher the premium is likely to be.
  • Your financial situation: Long-term care insurance can be expensive, and you’ll need to consider whether you can afford the premiums and still meet your other financial goals. If you have significant savings and assets, you may be more comfortable self-insuring and paying for long-term care out of pocket if the need arises.

At What Age Should You Start Investing In Long-Term Care Insurance?

There is no one-size-fits-all answer to this question, as the right age to invest in long-term care insurance will depend on your circumstances and financial situation. However, here are a few factors to consider when deciding when to start investing in long-term care insurance:

  • Age: As mentioned, premiums tend to be lower for younger applicants, so you may want to consider buying long-term care insurance for a younger generation if you can afford it. However, you may also face more stringent underwriting if you apply for coverage at a younger age.
  • Health: As with most types of insurance, your health can significantly impact the cost and availability of long-term care insurance. If you have certain preexisting health conditions, you may be charged a higher premium or be denied coverage altogether.
  • Financial situation: Long-term care insurance can be expensive, and you’ll need to consider whether you can afford the premiums and still meet your other financial goals. If you have significant savings and assets, you may be more comfortable self-insuring and paying for long-term care out of pocket if the need arises.
  • Family history: If you have a family history of chronic illnesses or disabilities requiring long-term care, you may want to consider buying long-term care insurance at an earlier age.

At What age Might A Long-Term Care Policy Be Too Expensive?

Purchasing long-term care insurance is usually recommended for individuals between the ages of 45 and 65. In that age range, long-term care policies tend to be more affordable as a person’s health is at its best, and providers are, therefore, willing to offer lower rates. However, after age 65, long-term care policies can become drastically expensive and likely won’t provide full coverage due to preexisting health conditions.

In addition, most long-term care policies have an age cap of 75 and will no longer offer coverage once it has been reached. Ultimately, the cost of long-term care coverage varies based on an individual’s current health condition and the price of living in their state, so it is essential to shop around before deciding which plan best suits your needs.

What Is Inflation Protection On Long-Term Care Insurance?

Inflation protection is a type of rider that can be added to a long-term care insurance policy to help keep pace with the rising cost of care. The rider provides an annual increase to the policy’s maximum benefit amount to help offset the impact of inflation on the cost of long-term care.

For example, if you have a long-term care insurance policy with a maximum benefit of $200 per day and an inflation protection rider that increases the use by 5% per year, the policy’s full benefit would increase to $210 per day the following year.

Inflation protection can help ensure that your long-term care insurance policy provides enough coverage to pay for the anticipated cost of care in the future. However, it’s essential to remember that adding an inflation protection rider to your policy will typically increase the premiums, so you’ll need to carefully consider whether the added cost is worth the additional coverage.

What Facilities Should I look Into When Buying Long-Term Care Insurance?

When buying long-term care insurance, you’ll want to consider the types of facilities the policy will cover if you need long-term care. Here are a few common types of facilities that may be covered by long-term care insurance:

  • In-home care: This refers to medical or personal care services provided in your home. This can include assistance with activities of daily living (ADLs), such as bathing, dressing, and toileting, as well as medical care, such as wound care or medication management.
  • Assisted living facility: An assisted living facility is a type of residential facility that provides a more independent living environment for individuals who need assistance with ADLs but do not require the level of care provided in a nursing home. Assisted living facilities typically offer various services, including meals, housekeeping, personal care, and social and recreational activities.
  • Nursing home: A nursing home is a facility that provides 24-hour medical and personal care to individuals who need a higher level of care due to a chronic illness, disability, or cognitive impairment. Nursing homes typically offer various services, including rehabilitation, medication management, and skilled nursing care.

What Are The Benefit Periods In Long-Term Care Insurance?

The benefit period in a long-term care insurance policy refers to the length of time that the policy will provide coverage for long-term care expenses. Benefit periods can vary widely among policies, and you’ll need to carefully review the policy terms to understand the length of coverage provided. However, here are a few common types of benefit periods that you may encounter when evaluating long-term care insurance policies:

  • Unlimited benefit period: An unlimited benefit period means that the policy will provide coverage for as long as you need long-term care, subject to the policy terms and conditions.
  • Fixed benefit period: A fixed benefit period means that the policy will provide coverage for a specific number of years, regardless of how long you need long-term care. For example, a policy with a five-year benefit period would provide coverage for up to five years, irrespective of whether you need long-term care for a shorter or longer period.
  • Conditional benefit period: A conditional benefit period means that the policy will provide coverage for a specific number of years, but only if you meet certain conditions, such as a required minimum number of days of care or a certain level of impairment.

Are There Any Waiting Periods Or Exclusions For Long-Term Care Insurance?

Yes, most long-term care insurance policies have waiting periods and exclusions that you should be aware of. A waiting period is a time you must wait after purchasing the policy before you can start receiving benefits. The waiting period is typically designed to give you time to adjust to the new policy and to ensure that you are not purchasing the policy solely to cover a preexisting condition. Waiting periods vary widely among policies but typically range from 30 to 90 days. Exclusions are conditions or circumstances that are not covered by the policy. Again, exclusions can vary widely among policies, but some standard exclusions include the following:

  • Preexisting conditions: Many policies exclude coverage for preexisting conditions, which are conditions you had before purchasing the policy.
  • Mental or nervous disorders: Some policies exclude coverage for mental or nervous diseases like dementia or Alzheimer’s.
  • Self-inflicted injuries: Some policies exclude coverage for self-inflicted wounds, such as those resulting from suicide or substance abuse.
  • Experimental or investigational treatments: Some policies exclude coverage for experimental or investigational therapies that are not widely accepted as a standard medical practice.

Next Steps

Long-term care insurance can help cover the cost of long-term care services, which you may need if you can’t take care of yourself for an extended period. While no one likes to think about needing this type of care, it’s possible for all of us, and it’s essential to be prepared. So if you’re thinking about purchasing long-term care insurance, we can help. We’ll provide you with a free quote to see how affordable it can be. And if you have any questions about long-term care insurance, our knowledgeable agents will be happy to answer them. So request your free quote today, and let us help you plan for your future.

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Frequently Asked Questions

What Should I Know About The Annuity Expert As It Relates To LTC?

The Annuity Expert is an insurance that educates and advocates long-term care insurance. We offer resources to help understand the importance of long-term care planning and how to implement it successfully.
We also provide products to solve long-term care needs, such as those seeking coverage beyond general health and life insurance policies. In addition, we work with companies on innovative ways to make long-term care insurance more affordable.

Does Long-Term Care Provide Death Benefits?

Some long-term care insurance policies include a death benefit, commonly found in a life insurance policy, a payment made to the policy beneficiary upon the policyholder’s death. Death benefits are typically paid in addition to any long-term care benefits that the policyholder may have received and can be used to help cover funeral and burial expenses or other debts and expenses.
Death benefits vary widely among policies, and the benefit amount may be based on the policy’s premium payments or the number of long-term care benefits received. Some policies may pay a flat amount as the death benefit, while others may pay a percentage of the policy’s face value or the premiums spent.

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

Medicare is a federal health insurance program available to people 65 or older and younger individuals with disabilities or certain medical conditions. However, Medicare does not cover most long-term care services, such as custodial care (help with activities of daily living, such as bathing, dressing, and toileting) or extended nursing home stays.
However, Medicare may help cover some long-term care services on a limited basis in certain circumstances. This includes coverage for nursing home care, in-home health services, and hospice care. Not only does this coverage assist in bridging the gap between regular health insurance plans and long-term healthcare services, but it also allows individuals to access long-term care services without financial burdens or delays associated with long-term care conventional financing from a private insurance company.

How Does Long Term Care Cover The Cost For Veterans

Depending on the type of policy a veteran has purchased, LTCI may provide reimbursement for out-of-pocket expenses related to long-term care plans like home health aides, skilled nursing, or transportation for medical appointments.
Additionally, Veterans who are enrolled in the Veterans Health Administration (VHA) and receive care from the VHA may be eligible for additional benefits through specialized VA-funded Long-Term Care programs. As a result, veterans obtaining Long Term Care Insurance can rest assured that their unique Long Term Care needs will be addressed even if finances become tight.

Does Long-Term Care Insurance Cover Assist Living?

Assisted living facilities provide a more independent living environment for individuals who need assistance with activities of daily living (ADLs) but do not require the level of care provided in a nursing home. Assisted living facilities typically offer various services, including meals, housekeeping, personal care, and social and recreational activities.
Many long-term care insurance policies will cover assisted living facilities as a form of long-term care, but this will depend on the specific policy terms. For example, some guidelines may have specific exclusions or limitations that apply to assisted living facilities, such as a maximum benefit amount or a requirement that the facility is licensed and meet specific other criteria.

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

Long-term care insurance is one way to help protect your retirement nest egg by providing financial protection against the high cost of long-term care services. The expenses can quickly add up if you need long-term care, and paying for out-of-pocket care can deplete your savings and assets.
Long-term care insurance can help cover the cost of long-term care services, such as in-home care, assisted living, or nursing home care, and can help you preserve your savings and assets for retirement. In addition, by purchasing long-term care insurance, you can transfer some of the financial risks of needing long-term care to the insurer and have the peace of mind of knowing that you have the plan to help cover the costs of care.

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

A long-term care insurance elimination period, also known as a waiting period, is the length of time that you must wait after purchasing the policy before you can start receiving benefits. The elimination period is typically designed to give you time to adjust to the new policy and to ensure that you are not purchasing the policy solely to cover a preexisting condition.
Elimination periods can vary widely among long-term care insurance policies but typically range from 30 to 90 days. The elimination period’s length can impact the policy’s premium, with more extended elimination periods typically resulting in lower premiums.

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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