Americans are living longer. As the population gets older, healthcare costs are growing as demand for medical care increases. At some point in your life, you may need ongoing medical attention if you have a disability or extended illness that requires long term care and causes you to lose income.
Nursing homes, assisted living facilities, and in-home care can be necessary expenses, and they are not covered by standard health insurance. If you need these services, long term care insurance helps to cover your costs.
Long term care insurance can provide compensation when you or a family member is rehabilitating after an accident or severe illness, or for an elderly family member with age-related care needs.
Our independent agent matching tool will find you the best insurance solution in your area. Tell us what you're looking for and we'll recommend the best agents for you. Any information you provide will only be sent to the agent you pick.
Long Term Care Insurance Statistics
- If you’re over 65, there is a 68% chance you will need long term care
- 35% of people receiving long term care are under 65
- Currently, the average cost of a nursing home is $70,000 per year
- In 2030, the average cost of a nursing home is projected to be $190,600 annually
What Is Long Term Care Insurance?
Long term care insurance, sometimes referred to as LTC insurance, is a type of health coverage that can help you cover your future costs if you ever need assistance or care due to an accident, injury, illness or age-related health issue. For example, long term care insurance can help you pay for an extended need for:
- Nursing home care
- An assisted living facility
- At-home care
- Rehabilitation and occupational therapy
Standard health insurance does not cover these services. Without ample savings, many people have a difficult time managing the out-of-pocket expenses of extended care.
As the long term care insurance statistics above show, long term care is often considered an important coverage for people headed into their later years to cover potential costs such as nursing care or dementia care.
However, this coverage can help anyone who is severely injured or develops a chronic condition and needs long term care.
It provides a wide range of assistance for people living with disabilities, including help with daily activities, medication management and rehabilitation.
When Is the Best Time to Buy Long Term Care Insurance?
You can purchase a policy at any time, though most people choose to purchase this insurance when they are relatively young. You are much more likely to be accepted as a young person than later in life or after you develop health complications.
For example, many people choose to buy long term care coverage in their late-40’s to mid-50’s, long before they anticipate needing care.
According to the American Association for Long Term Care Insurance, you have a 1 in 7 chance of being turned down for long term care insurance in your 50’s, and a 1 in 4 chance of being turned down in your 60’s.
People often choose to buy long term care coverage before they are statistically likely to need it because it can offer financial protection for a wide range of care needs. For example, long term care insurance can cover your care costs if:
- You have a car accident and need in-home medical care for an extended period
- You need daily assistance due to cognitive impairment, such as a stroke or dementia
- You need to move to an assisted living home due to a physical or mental disability
- You develop a chronic condition such as Parkinson’s Disease or multiple sclerosis
As you begin to consider preparing documents like a living will and life insurance, one of the questions that you may ask is, “Do I need long term care insurance?” This is a good time to visit with an insurance agent who can help to assess your needs.
Who Needs Long Term Care Insurance?
Long term care insurance may not be right for everyone. If you don’t have a lot of savings, you may qualify for Medicaid. This can help pay for long term care but it may only cover a certain period of time.
After that, you would be expected to pay for the remaining cost. At that point, it would be a good idea to have insurance for long term care.
If you have assets that total over $5 million and you can comfortably cover the cost of care, investing in a long term care policy may not be the best use of your financial resources.
However, those in the middle class can typically benefit from planning for potential disability costs with assisted living insurance. You will have the peace of mind that your long term care and even your living expenses are covered and your assets are protected.
If you aren’t sure if you need this type of coverage, speak to an independent agent who can compare long term care insurance with other care options to find what suits you best.
How Much Does Long Term Care Insurance Cost?
When considering long term care insurance costs, it’s important to consider your current needs and those you may have in the future. Then, review the potential annual costs of long term care. Covering those costs with an insurance policy is a far less expensive way to go than trying to finance it out of your own reserves.
For a single 55 year old, the average long term care insurance premium is $2,000 annually, and for a couple it’s typically around $2,400. This is compared to between $50,000 and $100,000 per year in care costs, in the event of a serious health condition or injury that requires long term care.
How to Save on Long Term Care Insurance Cost
There are a number of ways to save on this type of insurance. For example, the cost for a couple is much more affordable than buying two individual plans. When your purchase your policy, ask if you qualify for a discount. You can typically get premium reductions if you are in good health.
Some additional options you have to make your long term care insurance affordable include:
- Choose a longer elimination period: This is the amount of time you must cover your own care costs before your long term care coverage kicks in. Think of it kind of like an insurance deductible. If you can afford to push that out from 0 days (immediate benefits) to 60 or 90 days, you can typically get a lower-cost premium.
- Buy it before you need it: Once you need long term care insurance, it is unfortunately too late to save, and you may even be denied coverage. Buying long term care insurance while you are healthy will help you lock in a good rate.
- Buy a joint policy with your spouse: Again, the cost of a combined policy for a married couple is much more affordable than two separate policies.
- Pay your premium annually: If you can afford to pay your entire annual premium at once rather than in monthly installments, you can often save nearly 10% on your premium.
There may be additional savings for you based on your age, health profile or the specific long term care insurance company you choose.
Finding the Best Long Term Care Insurance for Your Needs
When you begin searching for long term care insurance providers, you will find that there are many different options. You may have some amount of coverage in your employer's benefits plan, for example.
If your employer doesn’t offer a plan or you are concerned that the plan through your job will not remain available to you in the event of a job change and want to explore additional options, start researching insurance options.
When you get a few quotes for coverage before you buy, you can feel assured that you're making the best choice for your needs and budget.
Use our independent agent matching system to find the best insurance plan in your area. You tell us what you’re looking for, and our technology will recommend the best agents for your needs. Any information you give us will only be sent to the agents you pick.