What Is Long-Term Care Insurance?
 Written by Dylan Tate Dylan TateDylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under... Read more |  Edited by Dan MarticioDan MarticioDan Marticio is the content manager at SmartFinancial and has written 150+ articles across multiple insurance verticals.... Read more |
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Long-term care insurance can help pay for impaired individuals to receive assistance with activities of daily living (ADLs) such as eating and bathing up to the policy’s daily and lifetime coverage limits. Coverage may apply whether the individual moves into an assisted living facility or stays at home.
Read below to see what your options are for coverage and how you can prepare for the future in case you need long-term care as you age.
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Key Takeaways
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How Does Long-Term Care Insurance Work?
Long-term care insurance is a subset of health insurance that covers medical services and personal care for elderly people or those with disabilities who need regular support in performing their typical living activities. It may be available as a standalone policy or as a rider for a life insurance policy.
By combining long-term care insurance with life insurance, you can guarantee that you get some benefit from the policy, whether that be payment for long-term care services or a death benefit for your beneficiaries after you die. Alternatively, you could purchase a life insurance policy with an accelerated death benefit rider, meaning you are allowed to collect a death benefit while you are still alive if you contract a terminal illness or develop a need for long-term care services.[1]
Some long-term care insurance policies may have an elimination period ranging from 30 to 100 days, during which you must pay for covered services out of pocket before your insurance provider will start paying. This is effectively the deductible for a long-term care insurance policy.[2]
What Does Long-Term Care Insurance Cover?
Long-term care insurance covers expenses related to receiving help with the following activities of daily living (ADLs):[2]
- Eating
- Bathing
- Getting dressed
- Going to the bathroom
- Controlling your bladder and bowel movements
- Getting out of a chair or bed
To be eligible to claim long-term care insurance benefits, you may need to show impairment in at least two of these six ADLs.[2] This coverage can pay for care you receive in your home or in a retirement community, nursing home or similar assisted living facility. It can also cover hospice and respite care.
What Isn’t Covered?
After you buy a long-term care insurance policy, your insurer might not cover expenses related to a preexisting condition for a set period of time. Your policy could also exclude coverage for services related to some mental illnesses, although it generally won’t be allowed to limit benefits for neurological conditions like Alzheimer’s disease and other types of dementia.[3]
Other common exclusions for long-term care insurance policies include treatment for intentionally self-inflicted injuries, treatment related to alcoholism and drug addiction, care you receive in government nursing facilities and care you receive outside of the United States.[3]
The time limit for a long-term care insurance policy could be as short as two to five years, although some policies will provide coverage for the rest of your life.[4]
Why Buy Long-Term Care Insurance?
Long-term care insurance may be worth buying due to the prevalence of long-term care needs and the high costs that accompany them. A 2017 study found that 70% of adults in the United States who live to age 65 eventually develop a need for long-term services and supports (LTSS) but only 48% actually receive paid care over the course of their lives.[5]
Paying for LTSS out of pocket might not be an option for most people because of how expensive long-term care is. For example, the median price for a nursing home room in 2021 was around $100,000 per year.[6] While many elderly people receive health coverage through Medicare, Medicare only provides coverage for LTSS for up to 100 days.[2]
Meanwhile, Medicaid is responsible for the majority of long-term care coverage across the United States.[7] However, individuals in most states aren’t eligible for Medicaid unless their countable assets are worth $2,000 or less, meaning it is only available to low-income individuals and those who have already spent most of their savings on care.[8] As a result, private long-term care insurance is a more broadly available way to receive financial support in the event that you develop LTSS needs without draining all of your financial resources.
How Much Does Long-Term Care Insurance Cost?
Long-term care insurance rates depend on factors like your age, sex, health conditions and lifetime coverage limit along with whether your benefits grow yearly and whether you file as an individual or as a couple. For example, prices for $165,000 in coverage for adults ages 55 through 65 ranged from $950 to $7,225 per year for individuals and $2,080 to $9,675 per year for couples in 2022.[9]
What Are the Pros and Cons of Long-Term Care Insurance?
To determine whether long-term care insurance would be a worthwhile investment for you or your family members, you should consider the following pros and cons of buying coverage.
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Pros |
Cons |
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Allows you to receive LTSS benefits without first draining all of your financial resources |
Policies typically require medical underwriting so you may not qualify for affordable coverage if you are already elderly, in poor health or in need of long-term care[4] |
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Coverage amount may automatically increase over time to account for inflation |
Insurers can dramatically raise premiums or require you to reduce your benefits in order to keep your premiums the same[10] |
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Premiums may be waived once you start receiving benefits[2] |
How Do I Buy Long-Term Care Insurance?
As you search for the right long-term care insurance policy, it’s ideal to obtain quotes from at least three to five insurance companies. Consider in advance whether you would like a standalone policy or a life insurance policy with a long-term care rider. To make this process go as smoothly as possible, you should consider taking advantage of an online insurance marketplace like SmartFinancial.
Simply insert your zip code below and you’ll be directed to a questionnaire about your coverage needs and budgets. We’ll then share the information you provide with insurance agents in your area who can offer you health insurance quotes or life insurance quotes for free.
- Insurance quotes /
- Health /
- Long Term Care Insurance
Dylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under his belt. He has over seven years of experience writing for online publications, primarily about gaming and esports. In the process, he has become an expert in search engine optimization, news reporting, feature writing and copy editing.
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