How to Buy Long-Term Care Insurance

When you’re buying long-term care (LTC) insurance, the most important steps are to figure out how much you need, research insurance companies, gather multiple quotes, and compare policies.

 Home and auto insurance aren’t just about low rates—they’re about the right coverage level. Talk to a trusted pro who can help you get both.

If you’re reading this article, you’re probably already convinced that getting a policy now is the best way to protect your nest egg and help offset the rising cost of care. And you’re right. Hear us silently applauding you through the screen—it takes a lot of courage to look at the facts of aging and take action.

If you want more clarity on the process of buying LTC insurance—and want to make sure you don’t miss a step—this article is for you. You’ll learn how to compare LTC insurance quotes and confidently choose the policy that’s right for you—so you can get back to planning your next craft project.

And heads-up: If you get confused by any of the terms, there’s a glossary at the end.

 

What Is Long-Term Care Insurance—and Do You Really Need to Buy It?

Long-term care insurance helps cover the cost of care when you need help with everyday things like bathing, dressing or getting around as you get older or face health issues. It usually covers care provided at home or in assisted living facilities, adult day care centers, or nursing homes.

LTC insurance doesn’t cover medical care, hospital and doctor visits, or prescriptions. And unless you get a policy that specifically covers it, LTC policies don’t usually pay for informal care given by family members.

Today, aging adults have a 56% chance of needing LTC, and 22% are expected to need it for more than five years.^[1] If you’re very wealthy and could foot the bill for three to six years of care without it bankrupting you—and if leaving your kids a legacy isn’t a priority—you might not need LTC coverage. In that case, you’d simply self-insure.

But you should get an LTC policy if:

• You want to protect your nest egg
• You want to have something to leave your kids
• You can afford the premiums
• You can’t afford to self-insure

You’ve worked too hard all your life to be broke at the end of it because long-term care wipes you out.

 

When Is the Best Time to Buy Long-Term Care Insurance?

If you’re healthy, it’s best to wait until you’re 60 years old to buy LTC insurance. The goal is to hit the sweet spot so you’re not buying too early and paying premiums longer than necessary—or waiting so long that premiums spike.

As you get older, you’re more likely to need long-term care, so insurers see you as riskier to insure—and charge higher premiums. You also don’t want to wait so long that you develop a health condition that makes you ineligible for coverage.

 

Before You Shop: Your LTC Checklist

When you head out onto the World Wide Web to get quotes and track down the perfect LTC policy, there are some things you’ll want to have on hand. And this includes a few numbers you need to figure out first—like your budget range for premiums.

Before you start getting quotes, figure out what kind of coverage you need by looking at your:

• • Estimated monthly retirement income
  • Current savings and assets
  • Local care costs

Then decide:

• Your comfortable budget range for premiums
• How much long-term care you could pay for out of pocket
• The daily or monthly benefit amount you want
• How long you want your benefit period to last (e.g., three years, five years, lifetime)

Once you’ve got those numbers, you can start the shopping process. As you gather quotes, you’ll likely need to provide info like:

• Current age and spouse’s age (if married)
• Health history (conditions, medications, surgeries, etc.)
• Family health history
• State of residence
• Desired daily/monthly benefit amount
• Desired benefit period
• Budget range for premiums

 

How to Buy Long-Term Care Insurance Step by Step

If you’re scanning this section and thinking, This seems like a lot of steps, don’t worry. You don’t have to do them all on your own—just the first few! Notice we covered steps 1–3 in the previous section. You’ll do those before you start looking up companies to get quotes.

And if you connect with an independent insurance pro, they can take on steps 4–6 for you. A trusted pro already knows the best insurance companies and will gather multiple quotes for you. They’ll also make sure the policies you’re looking at have all the features you want.

Here’s how to buy LTC insurance step by step:

Step 1: Estimate local care costs.

Get a feel for local care costs by calling a few care facilities.

Step 2: Calculate your coverage gap.

Compare local costs to what you can afford out of pocket based on your estimated monthly retirement income and assets. From there, you can figure out how much insurance coverage you’ll need.

Step 3: Figure out your desired benefit period and premium range.

Decide how long you want your benefit period to last. Then determine a monthly premium range you can afford.

Step 4: Research insurers.

Find strong, trustworthy insurance companies by checking financial ratings from agencies like AM Best and researching their industry reputation. You can work with an independent insurance agent to make this (and the next few steps) a lot easier.

Step 5: Get multiple long-term care insurance quotes.

Contact your list of trustworthy insurance companies for quotes, or have an independent agent do it for you. Compare at least three carriers. Be sure the quotes include any riders you may want, like an informal care rider.

Step 6: Compare policy design options.

Look over each quoted policy and compare the following:

• Daily or monthly benefit amount
• Benefit period
• Elimination period
• Inflation protection
• Home care coverage
• Informal care coverage

Step 7: Apply for the policy and complete underwriting.

Once you find the policy you want, it’s time to apply. The application and underwriting process may include filling out a health questionnaire, interviewing with the insurance company over the phone, taking a short cognitive test, and giving them access to your medical records.

Step 8: Review the final offer and accept the policy.

Confirm the premium, review the riders, and accept the policy. Then set up your payments.

 

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LTC coverage can be confusing. If you want to talk to an expert, a RamseyTrusted^® insurance pro would love to help—no strings.

 

What Should You Compare When Looking at Long-Term Care Insurance Quotes?

When you’re comparing policies, it might be tempting to simply look at the premiums and pick the cheaper one. But the cheapest LTC policy isn’t always the best. In fact, it could leave you high and dry when you need it most. That’s why it’s important to compare all the parts of the policies to make sure you’re getting the features you actually need.

Here’s a table of features you should make sure to compare.

Key Policy Features to Compare
Feature	What It Means	Why It Matters
Daily/monthly benefit amount	How much you’ll get per day/month	Determines whether your coverage will cover care costs
Total benefit pool	Total available money	Shows the overall value of the policy
Benefit period	Length of time benefits are paid	Impacts total pool of money
Elimination period	Waiting period before benefits start	Affects out-of-pocket costs
Inflation protection	Annual benefit growth	Protects against rising care costs
Home care coverage	Coverage for care at home	Ensures benefits cover the most common type of care
Reimbursement vs. indemnity (cash)	How benefits are paid	Affects flexibility and cost of benefits
Shared care rider	Shared benefit pool for couples	Lets spouses use each other’s unused benefits
Nonforfeiture options	Partial benefits if policy lapses	Protects some value if you stop paying premiums
Premium structure	Whether premiums are level or adjustable	Affects how predictable your future costs will be

 

 

What Questions Should You Ask an Agent Before You Buy?

The insurance agent should be an expert on LTC insurance, so don’t be afraid to ask all the questions. To make sure you know you’re getting the right policy for you, here’s a list of questions to ask when you’re reviewing quotes:

• Has this carrier raised rates in the past? How often?
• What triggers benefits to begin? (Inability to perform two ADLs? Cognitive impairment?)
• Is home care covered at 100%?
• Are there separate elimination periods for different types of care?
• How does inflation protection work?
• Can premiums increase? Under what circumstances?
• Is there a shared care option? (Can spouses share each other’s benefits?)
• Are there any policy exclusions I should know about?
• What happens if I move to another state?
• Is a return of premium rider available?

What Happens After You Apply and After You’re Approved?

After you apply for a policy, the insurance company will do a thorough review to figure out if insuring you is worth the risk. This is called underwriting.

The process will likely include:

• Review of your medical records
• A phone interview
• Cognitive screening

In many cases, underwriting can take a month or more. Once you’ve given the insurance company all the information they need and completed any interviews and tests, your outcome will be one of the following:

• You’re approved.
• You’re approved with modified terms. This means the insurer changed the policy based on something they discovered during the underwriting process.
• The decision is postponed. This isn’t a final denial—the insurer may pause the decision because of something like an unstable health condition.
• Your application is declined.

If you’ve been declined, you can request the reasons in writing and then double-check on your own that there were no mistakes in your medical records or tests. If you think mistakes were made, you can appeal the decision. Other options include working with an independent agent if you haven’t already and applying to other insurers.

Once you have the policy in hand, you’ll be allowed a free-look period. While this sounds a bit scandalous, don’t worry. It’s simply a safeguard that gives you around 10–30 days to cancel the policy and receive a full refund if you find something you didn’t expect and don’t like.

If you decide to accept the policy, all that’s left is to set up payments so you don’t forget to pay and let the policy lapse.

 

What Are Common Exclusions, Limitations and Red Flags to Watch For?

With every LTC policy, there will be some common exclusions and limits to the policy’s coverage. It’s a good idea to know them so you don’t confuse them with real red flags to run from.

Common Exclusions and Limitations

• Preexisting conditions (you won’t qualify for coverage if you have one)
• Elimination periods (also called waiting periods)
• Care provided by family members (informal care is often limited)
• Nonlicensed facility restrictions (care must be received in a state-licensed facility)

As you work with agents and review policies, there are a few things to look out for that can indicate you might want to run. Check out our list of red flags so you can be on your guard.

Long-Term Care Insurance Red Flags
Red Flag	Why
High-pressure sales tactics like “today only” discounts	Anyone selling a policy worth buying won’t need to pressure you.
Unclear benefit triggers	Vague benefit triggers can make it harder to qualify for claims.
Weak home care coverage	Limited home benefits reduce the policy’s real-world usefulness.
Poor financial ratings	You’re relying on the insurer maybe decades into the future, so financial strength matters.
Agent who offers only one carrier	Avoid captive agents—they’re paid to sell you on one particular insurance company.

One good way to avoid red flags is to go with a trusted independent insurance agent. And if you’re wondering where to find some, we’ve got you covered. We’ve vetted insurance agents all over the country and can connect you to an agent with the heart of a teacher. They’ve earned our RamseyTrusted^® seal of approval because they value serving over selling. They’ll help you find the right policy for your needs so you can wander the aisles of Michaels craft store worrying about nothing but what color yarn to get. (May all your coupons be 40% off, not 30%.)

You’ve worked too hard all your life to be broke at the end of it. Make a plan and get covered with long-term care insurance.

 

Glossary of LTC Terms

Activities of daily living (ADLs): These are basic tasks used to determine benefit eligibility. Most policies pay benefits only if you can’t perform two out of the six standard ADLs:

• Bathing• Dressing• Toileting• Transferring (moving in/out of bed or chair)• Continence• Eating

Benefit amount (daily or monthly benefit): This is the maximum amount the policy will pay per day or per month for covered care.

Benefit period: This refers to the length of time the policy will pay benefits (for example, two years, three years, five years or lifetime).

Benefit trigger: A benefit trigger is a condition that must be met before benefits begin. It’s typically the inability to perform two out of the six standard ADLs or severe cognitive impairment.

Cash (indemnity) policy: A cash policy pays a set benefit amount regardless of actual expenses. It offers flexibility but often costs more.

Cognitive impairment: Cognitive impairment is a decline in memory or thinking ability and is often caused by conditions like Alzheimer's or dementia. Most long-term care insurance policies count this as a benefit trigger.

Elimination period: This refers to the waiting period before benefits start (commonly 30, 60, 90 or 180 days). It’s similar to a deductible but measured in time.

Free-look period: This is a set time (typically 10–30 days after you receive the policy) when you can cancel for a full refund.

Guaranteed renewable: A guaranteed renewable policy can’t be canceled as long as premiums are paid. However, premiums may increase for a class of policyholders (a group of people with the same type of policy).

Home health care: Home health care is skilled or custodial care (help with daily living) provided in your home.

Hybrid long-term care policy: A hybrid LTC policy is a life insurance or annuity policy combined with long-term care benefits. It often includes a death benefit if long-term care benefits aren’t used.

Indemnity policy: An indemnity policy is another term for a cash-benefit policy (see Cash policy).

Inflation protection: Inflation protection increases your benefit amount over time to keep pace with rising care costs.

Informal care: This refers to care given by family members or friends who are not professional caregivers.

Licensed provider requirement: Most policies only pay for care provided by licensed or certified caregivers.

Lifetime maximum benefit: This is the total amount the policy will pay over your lifetime (calculated as daily/monthly benefit × benefit period).

Long-Term Care Partnership Program: This government program allows you to protect assets (like your house) after your death from Medicaid trying to recoup costs for your LTC. (Only available if your policy meets certain standards.)

Medicaid: Medicaid is a government program that can pay for long-term care if your income and assets fall below certain limits. It may also seek repayment from your estate after your death for the cost of your care.

Medicare: Medicare is federal health insurance for people age 65 and older. It generally doesn’t cover long-term help with daily activities.

Nonforfeiture benefit: This policy feature lets you retain some reduced benefit if you stop paying premiums after having done so for several years.

Nursing home (skilled nursing facility): A nursing home provides 24-hour medical supervision and assistance.

Pool of money: The pool of money is the total benefit available under the policy (monthly benefit × number of months in benefit period).

Preexisting condition: This refers to a medical condition that existed before you applied for coverage. Policies may limit or exclude coverage for that condition.

Premium: The premium is the amount you pay (monthly or annually) to keep the policy active.

Rate increase: This is an increase in premium approved by state regulators. It applies to a class of policyholders, not individuals.

Reimbursement policy: This type of policy pays actual covered expenses up to the policy limit. It typically costs less than indemnity policies.

Respite care: This refers to temporary care that gives family caregivers a break.

Restoration of benefits rider: This optional policy add-on restores benefits you’ve used if you recover and go a certain period without needing care.

Return of premium rider: This type of rider refunds some or all premiums if you cancel your policy or pass away without using benefits.

Shared care rider: A shared care rider allows spouses to share each other’s unused benefits.

Simple vs. compound inflation protection: Simple inflation protection increases benefits based on the original benefit amount only. Compound inflation protection increases benefits based on the growing benefit amount, so it increases faster over time.

Underwriting: This refers to the insurer’s process of reviewing your health history to determine whether you qualify for coverage and what it will cost.

Waiting period: The waiting period is another term for the elimination period.

Waiver of premium: This policy provision means the policyholder doesn’t have to pay premiums while receiving benefits.