Understanding Long-Term Care Insurance: A Comprehensive Guide

Shawn Plummer

CEO, The Annuity Expert

The journey of life is often as unpredictable as it is beautiful. Yet, as we age, the possibility of needing assistance in daily tasks—like bathing, eating, or moving around—becomes a reality for many. This is where long-term care insurance steps in as a financial savior. So let’s dive in and unravel this often-overlooked insurance type.

What is Long-Term Care Insurance?

Long-term care insurance is a policy designed to cover the costs associated with long-term care services that typically aren’t covered by regular health insurance, Medicare, or Medicaid. These services include in-home care, assisted living facilities, nursing homes, adult day care, and other related medical and personal services.

For example, imagine that Susan, a 75-year-old woman, has developed a health condition requiring daily assistance with activities. Her long-term care insurance policy covers the expense of home care services, making her life easier while protecting her savings.

How Does Long-Term Care Insurance Work?

The operation of long-term care insurance can be likened to other insurance types. When you purchase a policy, you’re essentially paying premiums to the insurance company, often called a long-term care insurance carrier. These payments guarantee the company will cover your long-term care costs when needed.

Take John, for instance. John bought a long-term care insurance policy at age 60. He’s been paying the premiums for long-term care insurance for ten years, and unfortunately, he now needs assisted living due to a sudden health complication. His policy will cover the expenses, alleviating financial stress during a challenging time.

Who Needs Long-Term Care Insurance?

It’s a common misconception that long-term care insurance is just for older people. While it’s true that older people are more likely to need long-term care services, anyone can benefit from such insurance, especially those with a family history of chronic illnesses or disabilities.

Consider the case of Martin, a 45-year-old man with a family history of early-onset Alzheimer’s disease. Opting for long-term care insurance is a prudent choice, providing financial protection should he need long-term care.

Why Do You Need Long-Term Care Insurance?

Two main reasons underpin the need for long-term care insurance:

High Cost of Long-Term Care: Long-term care costs can quickly deplete savings, making it a financial burden for many. Long-term care insurance alleviates this stress, ensuring you receive care without financial hardship.

Independence and Choice: Long-term care insurance offers the freedom to choose the best long-term care service suitable for your needs, ensuring comfort and peace of mind.

For example, Emma, 80, had to move into a nursing home due to a stroke. Fortunately, her long-term care insurance policy covers the high cost, ensuring she receives the best care while preserving her family’s financial stability.

How Much Does Long-Term Care Insurance Cost?

Long-term care insurance costs vary widely, depending on age, health condition, and policy specifics. Typically, the younger and healthier you are when buying the policy, the lower your premiums will be. However, remember that cost shouldn’t be the only factor when considering the best long-term care insurance. Always pay attention to the policy’s benefits and restrictions.

For instance, the federal long-term care insurance program offers affordable options for federal employees and their families, allowing them to secure good coverage at a reasonable cost. You can compare this with long-term care insurance rates different carriers offer to make an informed decision.

Long-Term Care Insurance

Long-Term Care Insurance Cost by Age

  • Costs for Individuals in Their 40s: Premiums are generally more affordable for individuals in their 40s, as insurers see them as lower risk. However, the likelihood of needing long-term care at this age is relatively low, so some may opt to wait before purchasing a policy.
  • Costs for Individuals in Their 50s: Premiums tend to increase as you enter your 50s; purchasing coverage at this age can still be more cost-effective than waiting until later. This is also when many seriously consider the potential need for long-term care services.
  • Costs for Individuals in Their 60s: Premiums typically rise significantly for individuals in their 60s as the risk of needing long-term care services increases. Despite higher premiums, purchasing coverage at this age can still provide valuable protection against the financial burden of long-term care.
  • Costs for Individuals in Their 70s and Beyond: Premiums can be prohibitively expensive for those in their 70s and older. Some insurers may not even offer coverage to individuals in this age group. For those who do qualify, it’s essential to carefully weigh the costs and benefits before purchasing a policy.

What Disqualifies From Long-Term Care Insurance?

Certain factors may disqualify an individual from obtaining LTCI, including pre-existing health conditions, advanced age, and a history of chronic illnesses. Insurers may deny coverage or charge significantly higher premiums for individuals with severe health issues or those more likely to require long-term care services. Eligibility criteria and underwriting guidelines vary among insurance providers, so it’s essential to research and compares different companies before deciding on a policy.

What Does Long-Term Care Insurance Cover?

The best long-term health care insurance covers various services and supports that aid daily activities like eating, bathing, dressing, toileting, and transferring. It can also assist with household tasks, including meal preparation, laundry, shopping, and running errands.

Types of Care Covered

  • Home Health Care: Long-term care policies typically cover home health care services, such as assistance with activities of daily living (ADLs), skilled nursing care, and physical or occupational therapy.
  • Assisted Living Facilities: Assisted living facilities, which provide a combination of housing, personal care services, and health care, are generally covered by LTCI policies.
  • Nursing Homes: Nursing home care, which provides round-the-clock skilled nursing care and assistance with ADLs, is typically covered by LTCI.
  • Adult Day Care Centers: Many policies cover adult day care centers, which provide daytime supervision and social activities for seniors who require assistance or supervision during the day.

Common Exclusions and Limitations

  • Pre-existing Conditions: Some LTCI policies may exclude coverage for pre-existing conditions or require a waiting period before coverage begins.
  • Mental Health Conditions: Certain mental health conditions, such as Alzheimer’s disease or other forms of dementia, may not be covered by all long-term care plans or may have specific limitations.
  • Maximum Benefit Periods: Most long-term care policies have maximum benefit periods, which cap the time you can receive benefits. It’s important to consider whether the benefit period you choose will be sufficient to cover your potential care needs.
  • Elimination Periods: LTC policies often include an elimination period, a waiting period before benefits begin. During this time, you’ll be responsible for covering care costs. Choosing a more extended elimination period can lower your premiums but may also increase your out-of-pocket expenses when you need care.

The Pros and Cons of Long-Term Care Insurance


  • Financial Protection: The eldercare insurance can help safeguard your assets and income by covering the often substantial costs associated with extended care services, thus reducing the burden on you and your family.
  • Access to Quality Care: With long-term care coverage, you can access a broader range of care providers and services, allowing you to choose the best care for your unique needs and preferences.
  • Flexibility in Care Options: Long-term care benefits typically cover various types of care, including in-home care, assisted living, and nursing home care, providing you with the flexibility to choose the most appropriate care setting as your needs evolve.
  •  Peace of Mind: Knowing that you have the plan to cover potential long-term care expenses can provide peace of mind for both you and your loved ones, alleviating concerns about the financial burden of care.


  • High Premiums: LTCI premiums can be expensive, particularly for those who purchase policies later in life, and may be unaffordable for some individuals.
  • Possibility of Never Using the Benefits: Some policyholders may never require long-term care services, meaning the premiums paid for coverage essentially go unused.
  • Limited Benefit Periods: Many long-term care insurance policies have limited benefit periods, which means that coverage may expire before you’ve exhausted your need for care, potentially leaving you to cover remaining expenses out of pocket.
  • Exclusions and Limitations: Long-term care insurance policies often have exclusions and limitations, such as pre-existing condition waiting periods and restrictions on certain types of care, which may result in denied or reduced coverage for some services.
The Pros And Cons Of Long-Term Care Insurance

Long-term Care Calculator

You can use this cost calculator for long-term care to determine if you have enough money to cover this future expense.

Who Has The Best Long-Term Care Insurance?

The Best Long-Term Care Insurance Companies

Now that you understand the basics, which long-term care insurance carriers are the best?

  • OneAmerica: This long-term care insurance company is one of the largest in the United States today. They have a wide range of life insurance policies and annuities that can meet the needs of any senior citizen. The insurance company also has a solid financial strength rating, which means you can be confident that they can pay out any claims you may have.
  • Global Atlantic: This is another excellent choice for long-term care insurance. They offer a long-term care annuity and a solid financial strength rating.
  • Guaranty Income Life Insurance Company (GILICO): This offers a long-term care annuity that can triple the value for qualified long-term care expenses. The financial stability rating could be better, but it is improving.
  • Lincoln Financial Group: This large insurance company offers a hybrid policy combining universal life and long-term care insurance. They have an excellent financial strength rating.
  • Mutual of OmahaMutual of Omaha is a long-standing leader in long-term care insurance, offering comprehensive coverage, various discounts and incentives, and exceptional customer service.
  • NationwideNationwide provides a range of long-term care insurance products, features a Care Concierge program, and firmly commits to financial stability and customer satisfaction.

The Best Long-Term Care Insurance For Spouses

Global Atlantic ForeCare Long-Term Care Annuity is a fixed annuity with Long-Term Care Benefits. When planning for retirement, we often consider protecting our assets from market volatility, taxes, or inflation. Still, there’s also an increasing need to consider the potential effect of long-term care costs. This long-term care coverage is two or three times the value of your annuity (depending on medical history), and it is much cheaper than traditional long-term care insurance.

The Best Long-Term Care Insurance With An Optional Extension Of Benefits

OneAmerica Annuity Care Long-Term Care Annuity are hybrid policies that can help you convert your taxable assets to tax-free when used for long-term qualifying care (assisted living facilities, nursing homes, and home health care). In addition, this single premium deferred annuity helps protect your retirement income stream if the need for care arises.

The Best Long Care Insurance For An IRA

GILICO AnnuiCare Long-Term Care Annuity is a tax-deferred fixed annuity that provides long-term care coverage. The hybrid-policy coverage is three times the value of your annuity, and it is much cheaper than traditional long-term care insurance. Plus, the premiums for long-term care are paid from the annuity’s value, so you don’t have to worry about large, out-of-pocket payments. IRA and other qualified retirement plans may fund this long-term care insurance plan.

The Best Long-Term Care Insurance Utilizing Life Insurance

OneAmerica AssetCare hybrid policies are whole life insurance that allows you to access the full death benefit of your life insurance policy (living benefits) to pay for qualifying LTC expenses. You may choose to accelerate your death benefit and use it to pay for care now if a need for care arises. If your death benefit is used up, you can extend benefits for a certain period or indefinitely. As a result, asset Care can help individuals plan for retirement sooner.

Places To Buy Long-Term Care Insurance

There are a few different places where you can buy long-term care insurance.

  • Long-Term Care Insurance Agents And Brokers: The first option is to purchase a policy through an insurance company. Many different companies offer this type of coverage. You can shop around and compare prices to find the best deal. Most long-term care insurance companies require a policy from an insurance agent like The Annuity Expert.
  • Your Employer: Another option is to purchase a policy through your employer. Many employers offer long-term care insurance as a benefit to their employees. If this is an option, check with your human resources department to see if this coverage is available.
  • The Government: You can also purchase long-term care insurance through the government. For example, the federal government offers the Long-Term Care Insurance Program (LTCIP). This federal long term care insurance program is open to anyone over 55 and meets specific health requirements.
  • Veterans Affairs: If you are a veteran, you may be eligible for long-term care insurance through the Department of Veterans Affairs (VA). The VA offers the Veterans Long-Term Care Insurance Program (VLTCTP). This program is open to any veteran meeting age and health requirements.

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. Long-term care insurance is designed to help cover the costs associated with extended care services, such as nursing home care, assisted living, or in-home assistance, which may be needed later in life.

Here are a few factors to consider when deciding on the best time to purchase long-term care insurance:

  • Age: Premiums for long-term care insurance are typically lower when you purchase the policy at a younger age. This is because the likelihood of health issues or pre-existing conditions increases as you get older, which can lead to higher premiums or even denial of coverage.
  • Health: Good health is an essential factor in obtaining long-term care insurance. Insurance companies often require medical underwriting, which involves assessing your health history and current health status. If you have existing health conditions, getting coverage may be more challenging or result in higher premiums.
  • Affordability: Premiums vary significantly based on age, health, coverage amount, and policy features. It’s essential to consider whether the premium cost fit within your budget and if you can comfortably afford them over the long term.
  • Future needs: Assess your personal and family health history to determine if there is a higher likelihood of needing long-term care services. Consider your family’s longevity and any genetic predispositions to specific health conditions. Additionally, evaluate your financial resources and whether you could cover long-term care costs without insurance.
  • Retirement planning: Long-term care insurance can be integral to your retirement planning strategy. By purchasing it early, you can help protect your retirement savings from being depleted by potential long-term care expenses.

Tips For Finding The Best Deal On Long-Term Care Insurance

Now that you know the different places to purchase long-term care insurance, you may wonder how to find the best deal. Here are a few tips to help you get started:

  • Shop around and compare prices. This is one of the best ways to find a good deal on any insurance policy. Be sure to compare prices from a variety of different companies.
  • Check with your employer. As mentioned, many employers offer long-term care insurance to benefit their employees. If this is an option, check with your human resources department to see if this coverage is available.
  • Research government programs. As a senior citizen, you may be eligible for long-term care insurance through the government. The federal government offers the Long-Term Care Insurance Program (LTCIP). This program is open to anyone over 55 and meets specific health requirements.
  • Check with your veterans’ benefits office. If you are a veteran, you may be eligible for long-term care insurance through the Department of Veterans Affairs (VA). The VA offers the Veterans Long-Term Care Insurance Program (VLTCTP). This program is open to any veteran meeting age and health requirements.

Alternatives to Long-Term Care Insurance

  • Self-Funding: Some individuals self-fund their long-term care expenses by setting aside savings or investments. This approach may suit those with significant financial resources or are comfortable considering potentially high out-of-pocket costs.
  • Life Insurance with Long-Term Care Riders: Another option is to purchase a life insurance policy with a long-term care rider. This allows you to access a portion of your life insurance death benefit to pay for long-term care expenses while still providing a death benefit to your beneficiaries if you don’t use the entire amount for care.
  • Annuities with Long-Term Care Benefits: Some annuities offer long-term care benefits, allowing you to use a portion of your income to cover care expenses. This option may appeal to those already considering an annuity for retirement planning.
  • Health Savings Accounts (HSAs): If you have a high-deductible health plan (HDHP), you may be eligible to contribute to a Health Savings Account (HSA). HSA funds can be tax-free for qualified medical expenses, including long-term care expenses.
  • Medicaid and Other Government Programs: For those who meet the eligibility requirements, Medicaid provides coverage for long-term care, including nursing home care and some home and community-based services. However, Medicaid often has strict income and asset limits, and the availability of services can vary by state.

Next Steps

Navigating the intricate world of long-term care insurance might seem daunting, but understanding its importance and functionality is the first step. Remember, long-term care insurance is not just about covering costs; it’s about ensuring a dignified, comfortable life when you need help the most. Investing in a long-term care insurance policy can safeguard your future and peace of mind.

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Frequently Asked Questions

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

According to industry experts, the best elimination period for long-term care insurance 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 are some factors you should consider when buying long-term care insurance?

Long-term care insurance can be essential in planning for long-term financial security. However, before committing to a long-term care policy, you should consider several factors, such as the range of benefits offered, the length and type of coverage, and the monthly or annual premiums. In addition, evaluating whether long-term care insurance suits your situation is crucial in determining if it’s the right decision. Also, discussing your needs and options with your insurance company and an experienced insurance professional before selecting a long-term care insurance policy is essential.

At what age should you consider purchasing long-term care insurance?

It is essential to consider purchasing long-term care insurance before the need arises, as eligibility is based on health factors, and costs increase with age. A good age to consider long-term care insurance is between 45 and 65 when individuals are still in relatively good health but may be planning for their long-term future.

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 long-term care insurance. 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, long-term care insurance policy loans, or other forms of private funding.

What does Long-Term care insurance not cover?

Long-term care insurance typically doesn’t cover 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, long-term care insurance 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 long-term care insurance rates since insurers consider them lower risk. However, the risk of requiring long-term care services increases as you age, leading to higher premiums. However, once you have purchased a policy and locked in your premium rate, age-related increases are less common unless the insurer raises rates for an entire class of policyholders.

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.

How much does long-term care insurance cost?

The cost of long-term care insurance can vary significantly based on factors such as age, coverage level, and health status. On average, a 55-year-old in good health can expect to pay around $2,000 per year for a policy with $150,000 and a three-year benefit period. For a 60-year-old, the cost can be around $2,500 per year for the same coverage.

What is the role of an insurance agent in helping individuals understand and select long-term care insurance policies?

Insurance agents are crucial in educating and guiding individuals through understanding and selecting appropriate long-term care insurance policies that meet their needs and preferences.

How does long-term care insurance cover the costs associated with residential care facilities?

Long-term care insurance typically covers some of the costs associated with residential care facilities, depending on the policy’s terms and the specific services the facility provides.

What is a lifetime maximum in long-term care insurance?

A lifetime maximum in long-term care insurance refers to the maximum coverage a policy will pay for eligible long-term care expenses throughout the insured individual’s lifetime.

How does severe cognitive impairment (SCI) impact the cost of long-term care insurance premiums?

The presence of SCI can impact the cost of long-term care insurance premiums, potentially leading to higher premiums due to the increased risk and associated care expenses.

How does including a life insurance payout affect the premiums and benefits of a long-term care insurance policy?

Including a life insurance payout may affect the premiums and benefits of a long-term care insurance policy, potentially lowering premiums or increasing benefits depending on the policy design.

What is included in long-term care insurance benefits?

Long-term care insurance benefits typically include coverage for various long-term care services, such as nursing home care, assisted living facilities, in-home care, and adult day care services.

Can individuals have both long-term care insurance and medical insurance policies simultaneously?

Yes, individuals can simultaneously have medical and long-term care insurance policies to cover different aspects of their healthcare needs.

What is a money-back guarantee in the context of long-term care insurance

A money-back guarantee in long-term care insurance allows individuals to receive a refund of premiums if they do not need long-term care services covered by the policy.

Can individuals use the cash value from their life insurance policies to pay for long-term care expenses?

Yes, individuals may have the option to use the cash value from their life insurance policy to help cover long-term care expenses, depending on the terms and conditions of the policy.

What is the biggest drawback of long-term care insurance?

A significant drawback of buying long-term care insurance is that the premiums may go up in the future. However, any premium increases would apply to a group of policies and must be approved by state insurance departments. In addition, it’s worth noting that insurance companies cannot raise the premium for just one individual policy.

Why do people not plan for long-term care?

Some adults mistakenly believe their current plans, such as Medicare and Medigap, will cover their long-term care costs. As a result, they may also overlook the likelihood of needing long-term care services. Moreover, some individuals feel that long-term care coverage expenses are too steep or they have other financial obligations that they prioritize.

What is the downfall of long-term coverage?

A potential drawback of long-term care insurance is that you may have to continue paying premiums for an extended period without ever requiring the benefits.

Can you cash out a long-term care policy?

Individuals with long-term care insurance policies typically have two options for retrieving their money. They can receive a portion of the premiums they paid or sell the policy for its current market value through a life settlement.

Who is the largest insurer of long-term care in the US?

The US’s largest mutual life insurance company is New York Life Insurance Company, founded in 1845. They provide traditional long-term care insurance and plans offering long-term and life insurance benefits.

Why do only a few million people carry private long-term care insurance?

The low adoption of LTC is because premiums have consistently increased while the average policy benefit has decreased. For example, people aged 55 to 64 paid an average of $1,900 per year for LTC coverage in 2005, but that amount has now increased to $2,600 in 2015.

Is long-term care premiums tax deductible?

To include your long-term care premiums as medical expenses when you file your tax return, you must fill out Form 1040 Schedule or calculate the deduction for self-employed health insurance. If you’re 40 years old or younger, you’re allowed to claim up to $450, whereas those between 41 and 50 can claim up to $850.

What is typically covered in a long-term care policy?

The policies for home care typically cover a wide range of services such as skilled nursing care, rehabilitation therapy (occupational, speech, physical), and help with personal care tasks like bathing and getting dressed.

Which of the following are not covered by long-term care insurance?

It is worth noting that while many long-term care policies do not cover mental illnesses, benefits for Alzheimer’s Disease, senile dementia, or organic brain disease cannot be excluded or limited. However, coverage for alcoholism, drug addiction, and intentionally self-inflicted injuries is typically not included.

What are the three types of long-term care policies?

To choose the right long-term care insurance, you should consider three main types: traditional, hybrid, and life insurance with a long-term care rider. Evaluate the advantages and disadvantages of each option before finalizing your decision.

How can long-term care insurance help individuals save money in the long run?

Long-term care insurance can help individuals save money in the long run by providing financial protection for costly long-term care services, preventing them from draining their savings or assets.

How does long-term care insurance coverage apply to assisted living facility expenses?

Long-term care insurance coverage can apply to assisted living facility expenses, providing financial support for the costs associated with residing in an assisted living facility, subject to the policy’s terms and conditions.

What is a zero-day elimination period in long-term care insurance?

A zero-day elimination period in long-term care insurance refers to a policy option where benefits start immediately without a waiting period for coverage to begin after the insured qualifies for long-term care services.

What is long-term care planning?

Long-term care planning involves preparing for future healthcare needs that may arise due to aging, chronic illness, or disability. It encompasses a range of services and support to assist individuals with daily activities like bathing, dressing, and eating. Long-term care planning involves considering options such as home care, assisted living, or nursing homes and exploring financial strategies to cover the associated costs. It aims to ensure individuals receive the necessary care and support while maintaining their quality of life and relieving potential burdens on family members.

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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