Long-Term Care Insurance
Coverage for extended care services like nursing homes and home health aides.
Typical cost: $2,000 – $7,000+ per year
What Is Long-Term Care Insurance?
Long-term care insurance covers the cost of care services that help with daily activities—bathing, dressing, eating, and mobility—when you can no longer perform them independently due to aging, chronic illness, or disability. These services aren't covered by regular health insurance or Medicare.
The Cost of Care
The median annual cost of a private nursing home room exceeds $100,000. Assisted living averages $54,000 per year. Home health aides cost $27-$30 per hour. Without LTC insurance, these costs can rapidly deplete retirement savings and burden family members.
When to Buy
The ideal time to purchase LTC insurance is in your mid-50s to early 60s. Buying too early means decades of premiums; buying too late risks health issues that increase premiums or make you uninsurable. Hybrid policies that combine life insurance with LTC benefits have grown popular as alternatives.
What's covered
Nursing Home Care
Covers daily costs of skilled nursing facilities for extended stays.
Assisted Living
Pays for assisted living facility costs including room, board, and personal care.
In-Home Care
Covers home health aides, skilled nursing, and therapy services in your home.
Adult Day Care
Pays for structured daytime programs providing supervision and activities.
Respite Care
Covers temporary professional care to give family caregivers a break.
Inflation Protection
Increases benefit amounts annually to keep pace with rising care costs.
Pros and cons
Advantages
- Protects retirement savings from catastrophic care costs
- Provides choice in where and how you receive care
- Reduces financial burden on family members
- Tax-qualified policies offer tax-deductible premiums
- Inflation protection keeps benefits relevant over decades
- Hybrid policies offer death benefits if LTC isn't needed
Considerations
- Premiums can increase substantially over time
- Health conditions may make you uninsurable
- Benefits may not fully cover high-cost care facilities
- Long elimination periods delay when benefits begin
- Use it or lose it concern with traditional policies
Frequently asked questions
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