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For most people, medical needs change as you get older. According to data from the American Association of Retired Persons (AARP), more than 50 percent of Americans over age 65 will eventually need some form of long-term care. To help you pay for the cost of long-term care, such as a nursing home, assisted living facility or home nurse, having long-term care insurance may be beneficial.
- Long-term care insurance may help cover a wide range of health support resources including rehabilitation services, daily living assistance and chronic illness care.
- Anyone who needs regular medical support in their daily lives for a protracted period of time may benefit from long-term care coverage.
- The average annual cost of long-term care insurance ranges from $950 to over $6,000, according to the American Association for Long-Term Care Insurance (AALTCI)
What is long-term care insurance?
Long-term care (LTC) insurance covers the cost of personal support for people who need assistance with activities of daily living (ADLs), such as bathing, dressing and eating. This care may be given in a senior living home, assisted living facility, daily care program or even at home. You may need this care because of a chronic condition or because of an injury or other non-permanent condition.
Having LTC insurance may be valuable because it covers many expenses that health insurance doesn’t typically cover. For example, Medicare and Medicaid only cover skilled nursing and rehabilitation for short periods of time, like immediately after surgery or while recovering from an injury. If you need assistance for an extended period of time, your health insurance probably won’t cover it, and you may have to pay out-of-pocket.
There are two main types of LTC insurance.
- Traditional LTC insurance: A traditional long-term care insurance policy only covers basic care. There’s usually a daily benefit of about $160 and a three-month waiting period before the benefits kick in. The cost of a traditional LTC insurance premium usually increases over time, with a rate hike every year as you get older.
- Hybrid LTC insurance: A hybrid LTC insurance policy includes the benefits of LTC insurance and some of the benefits of whole life insurance. A hybrid policy provides a death benefit to your heirs when you pass away, even if you never use the LTC benefits. The rates are locked in at the start of the policy, but hybrid policies tend to be more expensive than traditional policies.
Long-term care and medical bills data
The cost of medical care as we age can quickly accelerate. Long-term care coverage may be one way to prepare for these costs.
- 10 percent of Americans surveyed say that emergency medical bills are the reason that they carry a balance on their credit card month-to-month. (Bankrate credit card debt survey)
- 14 percent of Americans have some sort of medical debt. (Creditcards.com credit card debt survey)
- A 55-year-old man in the United States can expect to pay a long-term care insurance premium of $2,220 per year on average.
- Americans spend $475.1 billion annually on long-term care.
- Medicaid only covers 42 percent of America’s long-term care costs.
Your cost of medical care as you age will depend on a number of factors, including your health, location, and level of support from family and friends. If you are considering long-term care insurance, you may want to consider what it may cost you in premiums.
Long-term care insurance cost
The cost of long-term care insurance varies greatly, but traditional policies average out to about $2,220 annually for a 55-year-old man and $5,025 for a 55-year-old couple, according to the AALTCI. An annual hybrid policy, meanwhile, will set the same couple back $8,100 at 55 years old and a whopping $13,800 at 65 years old. However, remember that there’s a guaranteed payout for the hybrid policy, so the couple’s heirs would receive a return on that money.
Money tip: It's worth noting that most experts recommend buying LTC insurance before you actually need it — because you may not qualify for coverage if you’re too old or you already have a chronic health condition.
As you can see, age plays a big role in determining your cost, and LTC insurance premiums typically increase dramatically the older you get. There are other factors as well that play into the cost, including gender, marital status, the amount of coverage and the company that underwrites your policy.
Shoppers concerned about the long-term affordability of LTC coverage may opt for hybrid policies. Shoppers who only want coverage for a set period of time, such as those who plan to live with a relative when they get older, may opt for a traditional policy.
What does long-term care insurance cover?
LTC insurance provides coverage for many types of care that people may need as they get older or develop a disability or medical condition that makes it difficult to care for themselves. Here are some of the things that a typical LTC insurance policy will pay for:
- Home health care (occupational therapy, physical therapy, etc.)
- Nursing homes
- Adult day care
- Rehabilitation care
- Help with ADLs
- Skilled and unskilled nursing
Best long-term care insurance
There are several reputable life insurance companies that sell LTC insurance. To help you find the best long-term care insurance company for you, our experienced editorial team evaluated some of the top carriers based on coverage options, availability and J.D. Power’s 2022 Individual Life Insurance Study scores. Here are some of the best long-term life insurance providers based on our assessment:
|Company||Best for…||J.D. Power score|
|Mutual of Omaha||Customer satisfaction||801/1,000|
|New York Life||Online tools and resources||775/1,000|
|Northwestern Mutual||Financial strength||794/1,000|
Mutual of Omaha
Why Mutual of Omaha made our list: Mutual of Omaha is the third-highest-rated life insurance company in J.D. Power’s 2022 study. Mutual of Omaha has been writing insurance policies for more than a century, and it is known for offering solid comprehensive coverage. We like the website’s “Determine Your LTC Insurance Need” calculator, which shows you how much common long-term care expenses, like a home nurse or nursing home, might cost based on your age and location.
- Excellent customer satisfaction rating from J.D. Power
- Helpful online resources and calculators
- Must work with an agent to get a quote
- Only one LTC insurance policy offering
Learn more: Mutual of Omaha insurance review
Why MassMutual made our list: MassMutual may be a great LTC insurance provider if you want multiple policies to choose from. Mass Mutual offers both traditional and hybrid LTC/whole life insurance policies. The company’s CareChoice hybrid policies provide LTC, a death benefit and a policy surrender value, as well as the potential to receive dividends each year. As an alternative, you could get a life insurance policy from MassMutual with acceleration benefits, which can be used to pay for certain long-term care expenses.
- Multiple LTC insurance policy options
- Offers life insurance with LTC acceleration benefits
- Must work with an agent to get a quote
- J.D. Power score is just above average
Learn more: MassMutual insurance review
New York Life
Why New York Life made our list: New York Life offers some of the best online tools and resources for long-term care insurance. You can use the cost calculator to estimate long-term care costs in your area and check out helpful articles in the “Learn & Compare” section. New York Life, founded in 1845, is a national insurer that offers life and LTC coverage across all 50 states and Washington, D.C. New York Life is also an AARP partner for LTC needs.
- Many online resources and digital tools
- Traditional LTC and hybrid LTC policy available
- Online quoting is not available
- J.D. Power score is just above average
Learn more: New York Life insurance review
Why Northwestern Mutual made our list: Northwestern Mutual is a highly-rated company that offers a broad range of insurance policies, including LTC options. It has an A++ financial strength rating from AM Best, which is the highest level given. The carrier also came in fourth in J.D. Power’s 2022 U.S. Life Insurance Study, which ranks overall customer satisfaction. You can purchase a traditional LTC plan, hybrid LTC plan or a life insurance policy with accelerated benefits for long term care from Northwestern Mutual.
- Highest financial strength rating possible from AM Best
- Several LTC plans available
- No online quotes available
Learn more: Northwestern Mutual insurance review
Who needs long-term care insurance?
Long-term care insurance may be beneficial, but it’s not necessarily the right option for everyone.
In general, people who couldn’t comfortably afford to pay out-of-pocket for long-term care may benefit the most from this type of insurance. Because private health insurance and Medicare only provide a limited amount of long-term care coverage, you would likely end up paying out-of-pocket if you went into a nursing home or needed a permanent home nurse, for example.
On the other hand, LTC insurance might not be worth it if you’re in a comfortable financial position and could pay out-of-pocket for your long-term care needs. Because some LTC insurance premiums get more expensive over time, you could end up saving money instead, creating a nest egg for your medical care as you age. Additionally, if you know you will be able to live with a friend or family member who can care for you as you age or if you injure yourself, LTC coverage may be less essential.
Frequently asked questions
The AALTCI recommends that you explore options for LTC coverage while you’re in your 50s or younger and in good health. However, the best time to buy long-term care insurance may depend on your personal circumstances and coverage needs. That said, buying coverage when you’re young and healthy may help you qualify for lower premiums.
Most long-term care insurance policies provide coverage for up to five years. However, the exact length of time will depend on your insurance contract. An agent from your LTC insurance company can provide this information.
In most cases, you’re required to take a physical medical exam before you can get LTC insurance. The insurance company uses the findings from the exam to determine your eligibility and calculate your premium. However, younger applicants may not be held to the same exam requirements as older individuals.
These programs are collaborations between private insurers and each state’s Medicaid office. Participating in one of them protects some of your assets if you should need Medicaid in the future. There may be other benefits—your state’s Medicaid office will have more details.