The Definitive Guide to Long-Term Care Insurance

Last updated on March 30, 2021 by Chris Granwehr in Retirement Planning

Senior couple and their granddaughter benefiting from long-term care insurance

At some point, most people in the United States require long-term care.

And to make matters worse, long-term care (or LTC) is not covered by regular health insurance. In fact, according to AARP, only about 7.2 million Americans have long-term care insurance.

What exactly is long-term care insurance? Why is LTC insurance important? Do you need it?

Today we’re exploring the answers to these questions and more.

Keep reading for our definitive guide to long-term care insurance.

What is Long-Term Care Insurance?

Long-term care insurance is exactly what it sounds like – an insurance policy that protects you if you have a chronic medical condition that requires long-term care.

Do you have a disability, a debilitating disease, or a chronic illness? Then you’ll need long-term care insurance to help pay your long-term care bills.

But what exactly does long-term care insurance cover that disability insurance and medical insurance don’t?

Long-term care insurance covers you when you need to move to an assisted living facility. It also covers nursing home care, adult day care, and even in-home care if you have the option to stay in your own home.

Why is that so important?

The number one reason why long-term care coverage is important is because nursing home care, in-home care, and assisted living facilities are expensive.

The facilities provide incredible care for people who need daily assistance and long-term medical treatment, but they will cost you.

The best way to protect yourself is with a long-term care insurance policy that covers these needs.

How Does Long-Term Care Insurance Work?

Long-term care insurance works like most other types of insurance in that you are buying future protection in case you need it. In this case, you’re buying protection specifically to cover any long-term medical care that you may need.

Keep in mind, this is different from health insurance. Health insurance covers medical expenses, hospital bills, and medical procedures. Long-term care insurance is specifically for in-home assistance, nursing homes, and similar care methods.

With a long-term care insurance policy, insurance companies typically set a maximum daily benefit and a maximum monthly benefit in your policy. That means that they will pay up to a certain dollar amount, and you will be personally responsible for paying the rest.

Long-term care insurance only kicks in when the policyholder is unable to perform one or more activities of daily living, or ADLs,  including:

  • Eating
  • Bathing
  • Maintaining personal hygiene
  • Getting dressed
  • Using the restroom
  • Transferring yourself (for example, getting in and out of a bed or a chair)

Before you can collect, you’ll need to prove that you are unable to perform at least one of the essential activities. In addition to physical ailments, severe cognitive impairments like dementia and Alzheimers can also qualify patients for long-term care.

In order to collect, you’ll need to file a claim with your insurance provider. You won’t receive any benefits until they approve your request. Once your request is approved, there is typically a waiting period before you can start collecting. During this period of time, you will still be responsible for covering the full cost of your long-term care.

After the expiration of the waiting period, you can then start collecting your long-term care insurance benefits.

Long-Term Care Insurance Cost

woman hula hooping long term care insurance

As with any insurance policy, monthly premiums vary depending on a series of specific metrics. On average, long-term care policies cost about $2,700 per year or $225 per month.

Your personalized cost will be lower or higher depending on where you fit into the four key categories below.

1. Age

Age is the most important factor in a long-term care insurance policy. Older policyholders typically require more care than younger, healthy adults. The best way to protect yourself is to shop for a long-term care policy when you are still young.

When you’re young and relatively healthy, your premiums will be lower. But as you age, you can expect your premiums to rise 10% or more each year.

2. Health

If you have a pre-existing condition, expect to pay more. People who seek an insurance policy with a pre-existing condition are more likely to need long-term care. And the more likely you are to need it, the higher your premiums will be.

For individuals with a pre-existing condition, it’s best to consider taking out a policy when you are younger. That can help to counteract the extra costs you’ll pay when you’re older.

3. Gender

Statistically, women live longer. And that means that they’re more likely to need long-term care in their later years. There’s nothing you can do about it. Insurance policy premiums for women are higher than those for men.

4. Marital Status

If you’re married, you can save as much as 15% – 20% on your long-term care insurance premium.

Married couples have the option to buy a variety of different insurance plans, including those that allow them to share benefits. That means that in some cases if one spouse is sick, you can dip into the other spouse’s benefits to collect more than you would if you bought your own plan.

In other scenarios, there is a “third” account where both spouses have access to an independent pool of benefits. Spouses can enjoy access to funds that they can share equally or as needed. That means that one spouse won’t have to dip into the other spouse’s funds.

Whether you’re married or single, it’s always best to secure a policy before your health goes south. Don’t wait until you’re in your sixties or seventies to take out a long-term care insurance policy. If you do, you’ll pay significantly more than a 55-year-old in good health.

elderly couples save money on long term care insurance

Other Cost Factors to Consider

When it comes to how much your monthly premiums will be, the above metrics should only be used as a gauge. There are other factors involved.

As with all insurance policies, the more extensive your care benefits, the higher your average costs. If you want your benefit amount to pay for high-end care facilities and top of the line long-term care services, you’re going to have to pay for it.

Some policies also feature inflation protection, which is a good idea for most policyholders.

Regardless of the policy you take, there’s one key thing you have to remember:

Insurance providers always have the option to raise your premiums, even after a policy is purchased. You, as the policyholder, have the right to refuse the new rate hikes – but that also means you’ll be giving up your coverage.

Insurance providers assess policies on a regular basis, so as you age or as your health deteriorates, they are allowed to charge you more.

Where to Buy Long-Term Care Insurance

long term care insurance married couple

Ready to purchase long-term care insurance? The first place to start is with your employer’s Human Resources department.

Some companies allow employees to purchase long-term care insurance at group rates. If your company offers this, take advantage of it. You’ll pay less with a group rate than you will if you purchase an individual plan.

Unfortunately, it is becoming increasingly rare to get these types of benefits through work.

If your employer does not offer long-term care coverage, you’ll need to purchase your insurance through a private broker.

A good first step is to ask your insurance agent at your current life insurance provider to see if they offer long-term care insurance. Many people find it easier to have multiple insurance policies with the same provider than to have to deal with multiple companies.

Pros and Cons of Long-Term Care Insurance

long term care insurance

As with everything, there are pros and cons to buying long-term care insurance. Weigh your options carefully and make your decision based on your individual needs and health.


Tax Savings

Many people rely on Medicare and Medicaid to cover their medical needs in their later years. As you know, those are government-funded services.

The IRS and policymakers in Washington provide an incentive to encourage people to take out long-term care insurance to limit the dependence on government funds.

Depending on the state you live in, you may be eligible to take tax deductions on long-term care insurance premiums. Some states provide tax relief at the state level as well.


According to the U.S. Department of Health and Human Services, about 70% of Americans will require long-term care at some point. And you can’t count on Medicaid or Medicare to pay for all of your expenses.

If you want control over how and where you receive care, you can’t rely on Medicaid. Some nursing homes and assisted living facilities simply don’t accept it. And, in some cases, Medicaid can dictate which care facility you must use.

Medicare, on the other hand, does not pay at all for assisted living expenses or the cost of home health aides. Depending on your situation, it might cover nursing home care, but that’s usually only for less than a certain number of days (usually 100). Medicare will not protect you if you need long-term care.

Protect Your Savings

Unfortunately, many Americans find that they need to dip into their retirement savings to pay for medical expenses. That can be a scary situation, especially if you have little savings put aside.

By taking out a long-term care insurance policy, you can protect the investments that you worked so hard for. That means that you can use your retirement savings for other living expenses.



Long-term care insurance is not cheap, but long-term care costs aren’t cheap either. The average rate for a long-term care policy is about $225 per month, per individual. That’s just an average. It can be much more expensive, depending on your age, your current health conditions, and other factors.

Difficulty Qualifying

Just because you have a long-term care insurance policy doesn’t mean that you can reap the benefits. You can’t just be sick or have any old illness – you have to meet a certain standard to collect any payouts at all.

Qualifying for coverage can be a challenge in itself, especially if you have a pre-existing condition.

Long-Term Care Insurance Alternatives

long term care insurance for couples

If you find that you’re having a hard time qualifying for long-term care insurance, there are some alternative options you can choose.

You can plan (early) to create a sizable savings plan so that you can pay for your own care out of pocket.

You can tap into accelerated death benefits of a life insurance policy or make a withdrawal against the cash value of your life insurance policy.

You can also sell your life insurance policy for cash to help pay for long-term care.

For most Americans, having long-term care insurance is a good idea.

As long as you qualify, it will cover the costs of long-term care, including moving into a nursing home or an assisted living facility. It can also subsidize the cost of at-home health care if you choose to stay in your own home.

If you’re ready to find an insurance policy to protect you if you need extended care, start as soon as possible. The younger and healthier you are, the lower your premiums will be. Just remember – insurance providers can always implement rate increases as you age and as your health deteriorates.

Having this specific type of insurance can be a lifesaver – in more ways than one. Medicaid and Medicare won’t cover these sorts of expenses. Dipping into your retirement account to pay for care out of pocket can leave you penniless. And not being able to afford the care you need can be downright lethal.

Don’t spend your later years worrying about how you are going to take care of yourself and maintain your health. Don’t burden your loved ones by having to rely on family members to administer constant care.

Instead, prepare yourself ahead of time. Look into a long-term care insurance policy now. Whether you sign up for one or not, at least you’ll know your options.

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Chris Granwehr
Chris Granwehr is the SEO Lead at Mason Finance Inc. He graduated with a B.S. in business administration from Penn State University.

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