Understanding Long-Term Care Insurance: A Comprehensive Guide

Shawn Plummer

CEO, The Annuity Expert

Like most people, you probably don’t consider long-term care insurance until needed. But, unfortunately, by that time, it is often too late. The good news is that LTC insurance can be a valuable asset for anyone, regardless of age or health status. This beginner’s guide will discuss the basics of long-term care insurance and how it can help protect your finances if you need long-term care services.

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Understanding Long-Term Care Insurance

What is Long-Term Care Insurance?

Long-term care insurance is a financial product designed to cover the costs of extended care services for individuals who require assistance with daily living activities or ongoing medical care due to aging, chronic medical conditions, or disability. It typically provides coverage for a range of care settings, including home health care, assisted living facilities, nursing homes, and adult day care centers, helping to protect policyholders’ assets and income while ensuring access to quality care.

How Does Long-Term Care Insurance Work?

Long-term care insurance provides policyholders with financial coverage for extended care services when they require assistance with daily living activities or ongoing medical care. Policyholders pay premiums to maintain coverage. When they become eligible for benefits, the insurance company pays for the approved long-term care services up to the policy limits.

Who Should Get Long-Term Care Insurance?

Those between 45 and 85 are ideal candidates for LTC insurance, as it allows them to secure coverage without depleting their assets. LTCI is designed to help protect one’s assets and savings from being used to pay for care.

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.

What Does Long-Term Care Insurance Cover?

Types of Care Covered

  • Home Health 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 Facility: An assisted living facility, which provides a combination of housing, personal care services, and health care, is generally covered by long-term care insurance 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.

Common Exclusions and Limitations

  • Pre-existing Conditions: Some life insurance 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 or may have specific limitations on coverage.
  • Maximum Benefit Periods: Most long-term care insurance 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: Long-term care insurance 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.

What Does Long-Term Care Insurance Pay For?

The insurance pays for both formal and informal care that includes the following:

The Pros And Cons Of Long-Term Care Insurance


  • Financial Protection: LTCI 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 LTCI, 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: LTCI policies 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 a 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 LTCI 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: LTCI policies often have exclusions and limitations, such as pre-existing conditions, waiting periods, and restrictions on certain types of care, which may result in denied or reduced coverage for some services.
Cost Of Long Term Care Insurance

Understanding Long-Term Care Insurance Costs

LTCI costs vary based on the policyholder’s age, current health status and family health history, monthly benefits, duration, and optional features like inflation protection.

Premiums are generally more affordable for younger, healthier individuals and increase with age. The exact cost varies significantly between individuals and insurance providers, so obtaining quotes from multiple insurers is essential to determine the best coverage and pricing for your unique situation.

Factors Influencing Cost

  • Age: The younger you are when you purchase an LTCI policy, the lower your premiums will generally be. This is because younger individuals are seen as lower risk by insurers.
  • Health Condition: Your current health status and medical records significantly determine your premium costs. Individuals with pre-existing conditions or a history of chronic health issues may face higher premiums or even be denied coverage.
  • Benefit Amount and Duration: The amount of coverage you choose and the length of time you want the policy to provide benefits will also impact your premiums.
  • Inflation Rider: Inflation protection is an optional feature that helps your benefits keep pace with the rising care costs.

Cost of Long-Term Care Insurance 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.
  • 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.
  • 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.
  • 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.

Best Long-Term Care Insurance

Multiple insurance companies offer good policy benefits and reasonable monthly premiums:

  • Global Atlantic: Offers a fixed annuity providing long-term care benefits, flexible coverage, and guaranteed returns.
  • OneAmerica: Provides asset-based long-term care solutions with Asset Care, Lifetime Benefit riders, and joint coverage options for couples, combining life insurance with long-term care benefits.
  • GILICO: Known for flexible coverage options, competitive pricing, and strong financial ratings, making them a trusted provider of long-term care insurance.
  • Mutual of Omaha: A long-standing leader in long-term care insurance, offering comprehensive coverage, various discounts and incentives, and exceptional customer service.
  • Nationwide: Provides a range of long-term care insurance products, features a Care Concierge program, and firmly commits to financial stability and customer satisfaction.
Long Term Care Insurance

Tips For Finding The Best Deal

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. Many employers offer long-term care insurance to benefit their employees, so 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) program to anyone over 55 who 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).

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 who 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 bills, including long-term care expenses.
  • Medicaid and Other Federal Government Programs: For those who meet the eligibility requirements, Medicaid provides coverage for long-term care services, including nursing home care and some home and community-based services.

Next Steps

Long-term care insurance can provide valuable financial protection and peace of mind. Still, it’s essential to carefully weigh the pros and cons, understand the costs, and determine whether it’s the right choice for your unique situation. 

By considering your personal risk factors, financial resources, and long-term care preferences, you can decide whether to invest in LTCI or explore alternative options. Remember, planning is critical to ensuring that you and your loved ones receive the care and support you need in the future.

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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 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 are some factors you should consider when buying long-term care insurance?

LTCI 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.

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. According to the American Association for Long-term Care Insurance, the best age to apply is in the mid-50s.

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, long-term care 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 long-term care insurance 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.

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. Hence, taking out the policy may save money in the long run.

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?

LTCI costs vary significantly based on age, health status, benefit amount, duration, and optional features like inflation protection. Premiums are generally more affordable for younger, healthier individuals and increase with age. Exact costs differ between individuals and insurance providers, so obtaining quotes from multiple insurers is crucial to determine the best coverage and pricing for your unique situation.

Depending on individual factors, one company may offer you lower monthly premiums for the same coverage than other providers. Hence, it is always recommended to compare policies and choose the ones that match your expectations.

Where to buy LTC Insurance?

There are a few different places where you can buy long-term care insurance.
Insurance Company: 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: Many employers offer long-term care insurance as a benefit to their employees.
Government: The LTCIP program is open to anyone over 55 and meets specific health requirements.
For Veterans: Veterans may be eligible for the Veterans Long-Term Care Insurance Program (VLTCTP).

How much coverage do you need?

Insurance companies offer different coverage that may pay the cost of a private room in a nursing home, along with additional expenses. You can use our free calculator to estimate how much coverage you need to cover the long-term costs of care.

What is long-term disability insurance?

Disability insurance pays for the income you couldn’t earn due to a health condition that prevents you from working.

What are hybrid policies?

A hybrid policy is when an insurance carrier offers a product that includes both whole life insurance and long-term care insurance. This policy costs more but ensures a death benefit for your family once you pass away. As a standard, the hybrid policy has fixed premiums, but those are not tax-deductible.

What are examples of long-term care?

The three main long-term care types are home-based, facility-based, and community-based services. Home-based care includes home health care, homemaker services, friendly visitor/companion services, and emergency response systems. Facility-based care as nursing homes, assisted living facilities, and residential homes for older people. Community-based services include meals, adult day care, and transportation services.

What is the primary goal of LTC?

The main goal of long-term care services is to help people live as independently and safely as possible when they cannot perform everyday activities independently. These services focus on providing personal care and support to help people achieve their highest potential functioning and quality of life.

Why is Long-Term Care Important?

Long-term care is vital because it offers individuals access to specialized medical and personal care services and provides support and assistance with activities of daily living. It also helps to ensure a person’s safety and well-being while improving their overall quality of life.

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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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