How to Prepare for the Cost of Aging with Long-Term Care Insurance

Insurance involves thinking about the possibility of misfortune—everything from a damaged car, to a damaged home, to damaged heath. And the older we get, the more we need to consider the possibility of long-term care (LTC) insurance to help in our twilight years. 

What is Long-Term Care Insurance?

LTC is an insurance policy that pays for care when you can no longer manage yourself. Should you need to enter a nursing home, move to an assisted-living facility, use an adult daycare center or have a caretaker in your home, LTC can protect you, and family members, from financial disaster.

How High Are Long-Term Care Costs? 

The costs of long-term care are staggering. According to the 2018 edition of Genworth’s Cost of Care Survey, nursing home care averages $8,365 per month for a private room ($7,441 for semi-private), $4,000 per month for an assisted living facility. Homemaker and Health Aide care in your own home? Each averages more than $4,000 per month. It’s easy to see how savings can vanish quickly when the need for long-term care arises. For some, the only option is to fully exhaust their financial means until they qualify for a Medicaid facility.

Who Should Get Long-Term Care Insurance?

Anyone who could possibly find themselves in need of long-term care due to diminished mental or physical capacity at some point in the future is a candidate for long-term care insurance. From that perspective, that’s pretty much everybody. 

People are living longer, which means “old age” will be a more extended period than it was for previous generations. If your health is good, and you don’t have a family history of ailments such as stroke, dementia or Alzheimer’s Disease, you may not need much in terms of long-term care. But even the most fit people can find their capacities challenged as they head into the 80s, 90s and beyond. All it takes is one fall to change the entire course of an elderly person’s life.

Long-term care isn’t only for the elderly. If you’re in a profession that comes with the possibility of a debilitating injury, you may find yourself with diminished capacities at a young age. Is it better to spend money on long-term care insurance or take your chances that the odds will be in your favor? These are the kind of personal questions that make considering long-term care insurance so difficult.

How Does a Long-Term Care Policy Work?

Every policy will have its own fine points. But essentially, LTC insurance will begin paying out benefits once your physical or mental conditional reaches a particular point, determined by your insurer. Some policies will begin paying immediately upon reaching that point, where other less-expensive policies put a waiting period between the point at which you become eligible and the point at which payments begin.

What Does a Long-Term Care Policy Cost?

This is probably the most sensitive part of LTC insurance—it’s expensive. According to the American Association of Long-Term Care Insurance, a couple age 55 can expect to pay about $3,000 a year in LTC premiums. That’s why it is recommended to buy it sooner rather than later. If that same couple waited 10 years, their premiums would equal about $4,675 a year. A lot of money, to be sure. But if it eventually helps them each offset over $100,000 a year in nursing home costs, it might very well be worth it. 

How Much Long-Term Care Insurance Do I Need?

A reputable provider should be able to help you calculate a benefits amount that’s right for your situation. Try an online calculator to figure out the correct amount for you. Another smart move is to be sure you understand the healthcare costs you’ll need to meet in retirement well before the need for using your long-term care insurance might arise.

Where Do I Get a Long-Term Care Policy?

As with all decisions about insurance, make sure you buy your policy from a well-respected company. You need to be confident your insurance provider will still be in business when you start collecting benefits after decades of premium payments. SelectQuote doesn’t have a recommendation for one company over another, but a simple search for will help you get your search underway.

And keep in mind that long-term care involves more than just insurance concerns. There are other factors to consider. The U.S. Department of Health and Human Services offers a useful overview of the subject.