Long-term Care Insurance Guide: What It Covers. How Much It Costs.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

The Essentials of Long-Term Care Insurance

Protecting Your Financial Assets

Long-term care insurance (LTCI) is designed to safeguard your financial future by covering the costs associated with long-term care services that are not typically included in regular health insurance. This coverage can range from in-home care to assisted living and nursing home care. Without LTCI, these costs can quickly deplete your savings and assets. Investing in a policy ensures that your hard-earned assets are preserved for your heirs or other financial goals, providing you with peace of mind.

Ensuring Quality and Personalized Care

LTCI gives you the financial capability to choose high-quality care tailored to your specific needs. Whether you prefer to receive care at home, in an assisted living facility, or in a nursing home, LTCI allows you to select the best possible care setting. This personalized approach enhances your quality of life, allowing you to maintain your independence and dignity.

Relieving Family Stress and Burden

Securing LTCI alleviates the emotional and financial burden on your family members. Your loved ones can focus on your well-being rather than worrying about how to afford your care. This reduces stress and fosters a supportive and caring environment, allowing your family to enjoy quality time with you.

What Is Long Term Care Insurance? How Does Long Term Care Insurance Work? What Disqualifies From Long-Term Care Insurance?

Long-Term Care Insurance Cost

For a 60-year-old nonmarried healthy male, the estimated monthly premium for long-term care insurance varies based on the coverage and benefit period. A policy providing $5,000 per month of coverage for five years costs approximately $123.94 per month. Alternatively, a policy offering $3,000 per month of coverage for three years costs around $74.36 per month.

Average Cost By Age

AgeAverage Annual Premium
50$2,500 – $3,500
55$2,800 – $4,000
60$3,200 – $4,500
65$4,000 – $5,500
70$5,000 – $8,000
75$7,000 – $10,000+

Key Features of Long-Term Care Insurance

  • Coverage for Various Care Settings: LTCI policies typically cover care at home, in nursing homes, assisted living facilities, adult daycare centers, and hospice care.
  • Daily Benefit Amount: The maximum amount your policy will pay per day for your care. Choose an amount that reflects the cost of care in your area.
  • Benefit Period: The length of time benefits will be paid, ranging from two years to a lifetime.
  • Elimination Period: A waiting period before your benefits begin, similar to a deductible. Common elimination periods range from 30 to 90 days.
  • Inflation Protection: Adjusts your benefits to keep pace with inflation, ensuring your coverage remains adequate as care costs rise.

Factors to Consider When Choosing a Policy

  1. Age and Health: Premiums are lower when you purchase a policy at a younger age and in good health. Consider buying a policy in your 50s or early 60s.
  2. Cost of Care in Your Area: Research the current costs of long-term care services in your region to choose appropriate benefit amounts and durations.
  3. Policy Flexibility: Look for policies that offer flexibility in how benefits can be used and that allow for adjustments as your needs change over time.
  4. Insurance Company Reputation: Ensure the insurance company is financially stable and has a good track record of paying claims.
How Much Does Long Term Care Insurance Cost?

How We Can Help

At The Annuity Expert, we understand the complexities and emotional toll of planning for long-term care. With 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are dedicated to finding the best solutions at the lowest costs.

We recognize that the core problem is the overwhelming financial and emotional stress caused by the high costs of long-term care. This stress can manifest as anxiety about depleting your savings, worry about burdening your family, and uncertainty about the quality of care you will receive. Each of these symptoms affects you deeply, and we are here to address them with empathy and expertise.

What We Recommend

Step 1: Personalized Consultation

  • The first step is to schedule a personalized consultation with one of our experts.
  • During this consultation, we will assess your unique needs, preferences, and financial situation.
  • How it benefits you: Understand your options and how LTCI can fit into your financial plan.

Step 2: Tailored Policy Selection

  • Next, we will help you select a tailored LTCI policy that meets your specific needs.
  • We will explain the details of each option, including coverage amounts, benefit periods, and additional features like inflation protection.
  • How it benefits you: Receive a customized policy that provides comprehensive coverage and peace of mind.

Step 3: Ongoing Support and Adjustment

  • Finally, we provide ongoing support to ensure your policy remains relevant as your needs change.
  • We will assist you in making any necessary adjustments to your coverage.
  • How it benefits you: Continuous protection and the confidence that your policy will always meet your needs.

Features and Benefits

  • Personalized Policies: Custom-tailored to fit your unique needs, ensuring maximum coverage and satisfaction.
  • Expert Guidance: Professional advice from experienced agents who understand the nuances of LTCI.
  • Ongoing Support: Continuous assistance in adapting your policy as your circumstances evolve.
  • Cost-Effective Solutions: Strategies to secure the best coverage at the lowest possible cost.

Overcoming Common Objections

Some may feel that LTCI is too expensive or unnecessary. However, the cost of long-term care can be significantly higher without insurance, potentially leading to financial ruin. Others might believe they can rely on family or government assistance, but these options may not provide the needed quality or scope of care.

Not working with us risks inadequate coverage, financial stress, and a lack of personalized care options. Conversely, partnering with The Annuity Expert ensures financial stability, high-quality care, and peace of mind. You’ll experience relief from financial anxiety, confidence in your future, and the assurance that you and your loved ones are well-protected.

For free advice or a quote, contact us today.

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Questions From Our Readers

What is the best elimination period for long-term care Insurance?

According to industry experts, the best elimination period for LTCI is typically between 90 to 180 days. This time allows the policyholder to receive the maximum benefits from their policy while still having the lowest possible premiums.

What happens if you run out of money for long-term care insurance?

A few options are available if you run out of money for LTCI. First, you may be eligible for government programs such as Medicaid, which can help offset long-term care costs. Additionally, you can look into other forms of financing, such as reverse mortgages, life settlements, insurance policy loans, or other forms of private funding.

What does long-term care insurance not cover?

Long-term care coverage does not apply to care provided by family members, medical care costs, daily benefit amounts, regular health insurance costs, home care-only services, activities of daily living, homemaker services, and policies based on health history. In addition, LTCI does not cover end-of-life expenses, including hospice or burial costs.

Do long-term care insurance premiums increase as you age?

Yes, premiums generally increase as you age. When purchasing a policy, younger individuals typically pay lower rates since insurers consider them lower risk. As you age, the risk of requiring long-term care services increases, leading to higher premiums. Other factors that impact monthly premiums are age, gender, marital status, and health.

Is long-term care insurance worth it?

The Federal Government predicts that 7 out of 10 retirees above 65 will need some long-term care in their lifetime. Unfortunately, long-term care is not covered by regular health insurance. Medicare will not help either. Covered care only includes short stays in nursing homes or rehab, not custodial care.

Does long-term care insurance cover hospice?

Yes, LTCI typically covers hospice care. Hospice care provides comfort and support for terminally ill patients. Coverage specifics vary by policy, so reviewing individual policy details is essential to determine the extent of hospice care coverage.

Does long-term care insurance cover in-home care?

Yes, LTCI often covers in-home care. This allows policyholders to receive care in the comfort of their homes. However, coverage details can vary, so checking individual policy terms is crucial to understanding the in-home care benefits provided.

Can a long-term care insurance policy cover both my spouse and me?

Yes, many providers offer “shared care” policies. These allow couples to share a combined pool of benefits, covering both spouses under one policy. This can provide flexibility in how the benefits are used between the two individuals.

Does long-term care insurance cover independent living?

Typically, long-term care insurance does not cover the costs of independent living or retirement communities. However, it can cover services received within those settings if they qualify as long-term care, like home health care. Policies vary, so it’s essential to review your policy’s specifics.

Does long-term care insurance cover assisted living?

Yes, most policies cover assisted living facilities, as they fall under the category of long-term care services. The amount and duration of coverage depend on the policy’s specifics. Always review your policy details to understand the extent of coverage.

What are the advantages and disadvantages of long-term care?

The advantages include comprehensive coverage for various care services, inflation protection, and potential tax benefits. The disadvantages include potentially rising premiums over time, a “use-it-or-lose-it” policy where unclaimed premiums are forfeited, and sometimes limited coverage on certain services.

Why might a younger person buy long-term care insurance?

Purchasing long-term-care insurance at a younger age can be a savvy financial decision. Premiums tend to be lower, allowing younger individuals to lock in favorable rates.

Is there an age limit to purchasing long-term care insurance?

Many insurance companies have age limits for new long-term care policies, typically around 75-85. However, some providers may make exceptions based on an individual’s health and lifestyle.

What is the best time to buy long-term care insurance?

The age factor plays a vital role in the cost. Generally, younger buyers can secure more favorable rates. However, according to industry experts, the best time to buy long-term care insurance typically lies in your mid-50s to mid-60s.

What triggers a long-term care insurance policy?

Many long-term care policies have a “loss of independence” trigger. Your policy benefits will be activated if you require assistance with a specified number of ADLs. Some policies include a specific cognitive impairment trigger, such as a diagnosis of dementia or Alzheimer’s disease. Once this trigger is met, the policy benefits kick in. A common requirement is a physician’s certification stating that you need long-term care due to a chronic illness or disability. This certification is often necessary to initiate the benefits.

What is the federal long-term care insurance program?

The United States Federal Long-Term Care Insurance Program (FLTCIP) is a voluntary insurance program available to federal employees, including uniformed service members and qualified relatives. The program provides an essential safety net that helps cover the costs of long-term care services.

Does long-term care insurance pay family caregivers?

The answer varies depending on the policy. Some policies cover care family members provide, although typically with certain restrictions and conditions. For instance, the family member may need to be a licensed caregiver, or there may be limits on the compensation amount.

Who are the best candidates for self-funding long-term care costs?

Individuals with significant savings or assets, a stable income, and limited reliance on government assistance are the best candidates for self-funding long-term care costs.

What’s the cost of long-term care insurance at age 60?

At age 60, assuming you’re in good health, you might pay around $3,000 per year or $250 per month.

How much does long-term care insurance cost for a 65-year-old?

The cost of long-term care insurance for a 65-year-old varies depending on several factors, including their health, the coverage amount, and the duration. On average, premiums can range from $2,000 to $5,000 annually. It is recommended for individuals to obtain personalized quotes from insurance providers to get an accurate estimate.

How much is long-term care insurance for a 75-year-old?

The cost of long-term care insurance for a 75-year-old varies depending on factors like health, coverage amount, and policy options. A 75-year-old can expect to pay around $5,000 to $10,000 annually for long-term care insurance. However, getting personalized quotes from insurers is recommended for an accurate estimate.

What’s the cost of long-term care insurance at age 77?

Long-term care insurance costs are higher at age 77 due to the increased risk associated with age. Premiums can reach up to $6,000 per year, equivalent to $500 monthly.

What is the average cost of long-term care insurance?

The average cost of long-term care insurance varies depending on several factors, including the insured’s age, health, and desired level of coverage. However, on average, the annual premium can range from $1,500 to $3,500.

Is it too late for my wife’s aunt, who is 89 and on the border between assisted living and nursing care, to buy long-term care insurance?

Generally, it is too late to purchase long-term care insurance at the age of 89, especially if she is already in need of assisted living or nursing care. Most long-term care insurance policies have age limits, often around 85, and require underwriting based on health status. Additionally, pre-existing conditions and the current need for long-term care services usually disqualify individuals from obtaining new policies.

Can I purchase long-term care insurance for someone 83 years old?

Options are very limited. However, you can purchase a single-premium simplified-issue life insurance policy with a long-term care benefit.

What is the difference between reimbursement and indemnity long-term care insurance?

The main difference between reimbursement and indemnity long-term care insurance is their benefit payout methods. Reimbursement policies cover the actual costs of eligible long-term care services, reimbursing you for expenses up to a certain limit based on submitted receipts. In contrast, indemnity policies pay out a predetermined daily or monthly benefit directly to you, regardless of the actual expenses, offering more flexibility in how the funds are used.

Are long-term care (LTC) benefits that exceed the expenses incurred considered taxable income?

Typically, long-term care insurance policies are structured on a reimbursement basis, meaning they reimburse for actual expenses incurred up to a certain limit, which helps prevent receiving excess benefits. In this common arrangement, there wouldn’t be excess benefits over the cost of care. However, the excess amount may be taxable if your LTC benefits exceed this cap.

Why might choosing private long-term care insurance be preferable over employer-provided one?

The main advantage of private long-term care insurance is its portability. A private policy remains in effect regardless of your employment status or changes in your career. This means that if you switch jobs, retire, or become unemployed, your coverage continues uninterrupted as long as you pay the premiums. In contrast, employer-provided long-term care insurance typically ends when you leave the company.

My husband and I are 74 and 73, respectively, and are in excellent health. We both have State Teachers Retirement, and the healthcare is great, but we are worried about long-term care. Is that available as a hybrid to our existing healthcare policy?

As retirees with excellent health coverage through State Teachers Retirement, you might consider hybrid long-term care insurance. Hybrid policies combine long-term care benefits with life insurance or annuities, providing financial flexibility and ensuring you receive benefits even if long-term care is unnecessary. Check with your existing healthcare provider to see if they offer hybrid long-term care options, or consult an independent insurance agent for tailored advice.

Are long-term care benefits taxable?

Long-term care insurance premiums may be tax-deductible if they exceed a certain percentage of your adjusted gross income (AGI) and you itemize deductions. The deductible amount varies based on age and is subject to IRS limits.

Can I get long-term care insurance without a medical exam?

Yes, through long-term care annuities and hybrid life insurance policies. These options typically require only a phone interview and a medical history review.

What happens if you cancel long-term care insurance?

If you cancel long-term care insurance, you lose coverage and won’t receive any benefits if care is needed. Additionally, you may forfeit any premiums paid unless your policy has a return-of-premium feature, which is rare.

How long is the typical free look period for long-term care insurance policies?

The typical free look period for long-term care insurance policies is 30 days. This allows you to review the policy and cancel it for a full refund if you are unsatisfied.

Can you lower long-term care insurance premiums?

Yes, you can lower long-term care insurance premiums by adjusting the coverage amount, choosing a longer elimination period, selecting a shorter benefit period, opting for a shared care rider, or qualifying for good health discounts.

Can you buy long-term care insurance with a lump sum of money?

Yes, you can buy long-term care insurance with a lump sum of money through single-premium policies or long-term care annuities, which provide benefits for care expenses without ongoing premiums.

Do I need long-term care insurance if I’m wealthy?

Even if you’re wealthy, long-term care insurance can help protect your assets, provide financial flexibility, and ensure high-quality care without depleting your estate. It can also relieve the financial burden on family members and offer peace of mind.

Where is the best place to purchase long-term care insurance?

The best place to purchase long-term care insurance is through independent agents. They offer various options from multiple insurers, provide unbiased advice, and tailor solutions to your needs and budget.

What is the most affordable way to buy long-term care insurance?

The most affordable way is to purchase a policy at a younger age, typically in your mid-50s to early 60s. Opt for a policy with a longer elimination period, shorter benefit period, and lower daily benefit amount. Consider hybrid policies or annuities with long-term care riders for more cost-effective coverage.

What disqualifies someone from long-term care insurance?

Pre-existing conditions like Alzheimer’s, dementia, or severe mobility issues can disqualify someone from long-term care (LTC) insurance. Additionally, advanced age and current dependence on long-term care services may also lead to disqualification.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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