Is Long-Term Care Insurance Worth It?

If you’ve walked with an aging family member through long-term health issues, you know how expensive care like that can be. But is long-term care (LTC) insurance worth it for you?

 Long-term care is an important decision. Connect with a trusted pro to make sure you have the right coverage.

The short answer is yes. Long-term care insurance is one of the best ways to make sure you (or your loved ones) have a plan to pay for your care as you age.

Let’s dig into why (and when) you should look into long-term care insurance.

What Is Long-Term Care Insurance?

Long-term care insurance is a type of coverage that helps offset the costs of long-term care as people age. It covers most of the expenses that aren’t covered by Medicare—things like:

• Assisted living facilities
• Nursing homes
• In-home modifications
• Caregivers
• Care management
• Medical equipment
• Adult day care services

Even though we don’t like to think about it, nearly everyone will need some kind of long-term care. Of 65-year-olds living today, almost 70% of them will need long-term care. And 20% will need it for more than five years.³ But only 7.5 million Americans have some kind of long-term care insurance^.4 That’s a huge risk that the millions who lack it may not realize they’re taking!

Is Long-Term Care Insurance Worth It? 

Yes. Long-term care insurance is absolutely worth the cost. It’s the best way to cover the sky-high costs of long-term care. A lot of people take an “I’ll cross that bridge when I get there” approach to planning for long-term care. But with costs rising every year, you simply can’t do that. You need a plan—and that’s the point of long-term care insurance.

We loved hearing from a few of our Baby Steps Facebook Community members about how LTC insurance has changed their lives for the better. Take Jennifer T., for example.

“My mother-in-law’s husband had LTC insurance and it worked amazing,” Jennifer said. “Before he declined, he picked out the facility where he wanted to be. The place would have cost them $8,000 per month out of pocket, but the insurance paid everything.”

And Christina G. has also seen the benefits firsthand.

“I work as a manager in home care,” she said. “My clients will spend up to $27,000 per month for 24/7 care. Get the long-term care insurance.”

Great advice. Here are just some of the benefits of LTC insurance.

• Monthly premiums are well worth it later on when those in-home care or assisted living bills start piling up.
• You won’t be burdening your family with handling everything, including pitching in on the bill (that’s one tab you don’t want to go halfsies on).
• You’ll enter your golden years knowing you have a plan.
• Your quality of life will be higher than if you were constantly trying to cut costs.

How Much Does Long-Term Care Cost? 

We hate to be the bearer of bad news, but long-term care is really freaking expensive—and the cost continues to skyrocket.

In America, the median cost for just one month in a nursing home is $9,277.⁵ Yikes! And three years of long-term care can easily cost six figures—from about $212,400 for an assisted living facility to over $383,250 for a private room in a nursing home.⁶ That’s enough to buy a nice house—or drive you out of your own if you had to pay it out of pocket!

There’s no other way to say it: Long-term care will cost you a pretty penny. Even if you have a strong Health Savings Account (HSA) in place, you still don’t want to rely on that alone to pay for long-term care (even though it’s a valid option for covering some long-term costs).

Keep in mind that regular health insurance won’t cover these costs since long-term care is not considered medical care. And Medicaid—the government program for people with low income—is not a good first choice. For Medicaid to even partially cover long-term care costs, you’d have to use up your assets first. No one wants that.

How Much Does Long-Term Care Insurance Cost? 

The cost of long-term care insurance depends on a few variables:

• Age
• Gender
• Health status
• Family health history
• Location
• Marital status

Annual long-term care insurance premiums range from around $1,000 to about $10,000. More expensive policies include longer policy terms, cover more costs, or feature add-ons like inflation protection. The cost can also vary based on the carrier you use, even if it’s for the exact same policy.

That’s a pretty wide range, so let’s look at the average annual premiums for a policy benefit of $165,000:

• The average premium for a 60-year-old male is $1,200–3,800 per year.
• The average premium for a 60-year-old woman is $1,900–6,700 for the same coverage.⁷ Women tend to outlive men by about five years and need an average of 3.7 years of care, while men average 2.2 years of care.^8,9
• For the same coverage amount, the average premium for a 60-year-old couple is $2,600–8,700 a year for a combined policy.¹⁰ The couples discount ranges from 15–30% depending on where you live.¹¹

If that sounds like a lot, we get it. But compared to the costs of long-term care, long-term care insurance is a great deal in the long run.
 

Insurance Can Be Confusing. We Have Someone Who Can Help.

RamseyTrusted insurance pros are pre-vetted—which just means we’ve filtered out all the duds. And they make getting long-term care insurance one less thing to stress about. Plug in your zip code to connect with an agent and get started.

7 Pros of Long-Term Care Insurance 

We touched on the benefits of long-term care insurance earlier, but let’s take a closer look at why we recommend it.

Here are seven pros of getting long-term care insurance.

1. You’ll have a plan in place.

Unless you have a really high net worth and can self-insure, long-term care insurance is the best way to cover the costs of aging. Relying on the government or your family or friends rarely turns out well.

2. You won’t have to dip into your savings.

The nest egg you worked so hard to build could get scrambled pretty quickly by long-term care costs. Long-term care insurance protects your assets, and you won’t have to worry about burning through your savings and leaving nothing for your spouse to live on.

3. Monthly premiums are usually reasonable.

Depending on your age and health, your monthly premium will probably be pretty affordable. The average 60-year-old male pays around $200 a month. That’s not bad considering how much you get when you use your coverage.

4. You’ll be able to live in your home longer.

Many don’t realize that long-term care insurance covers things like in-home modifications (think wheelchair ramp) as well as caregivers and care management services. That takes stress off you and your family members. And it means you can live longer in your home sweet home.

5. Your family won’t have to take on the full burden of care.

Instead of relying solely on family for your care, you can use your policy to cover the costs of caregivers to carry some of that heavy load. That way, you and your loved ones can enjoy your time together without the stress of managing constant care. Plus, your family won’t have to worry about footing the bill.

6. You’ll pay less in taxes.

Long-term care insurance premiums are tax deductible up to a certain limit. This means you’ll pay less in taxes and keep more of that hard-earned money in your pocket.

7. You’ll have peace of mind.

We saved the best for last. The peace of mind you get from knowing you have a long-term care plan in place is worth its weight in gold. You’ll sleep better at night knowing you’ll be taken care of and your family won’t be overburdened.

5 Cons of Long-Term Care Insurance

Now for the cons. To be honest, looking for cons of long-term care insurance is a little like looking for a needle in a haystack. There aren’t many of them. But let’s take an honest look at the drawbacks.

1. Long-term care insurance can be expensive.

Reality check. If you’re purchasing long-term care insurance at 65 years old and already have a few health issues, you might end up paying more for your policy. But that’s still far better than paying the full cost of long-term care out of pocket later.

2. Long-term care insurance companies can raise your premiums.

Because long-term care is getting more expensive, insurance carriers can hike your premiums even after you’ve purchased your policy. But most kinds of insurance are subject to rate hikes—that’s the nature of sharing life’s risks with an insurance company, and the benefits usually far outweigh the costs.

3. It can be hard to judge how much you need.

No one has a crystal ball to see into the future and know exactly how much care you’ll need. If you choose a lower benefit, you might end up needing more. But if you choose a higher benefit and don’t need it, you can feel like you “wasted” those higher premiums.

With all the factors at play, we always recommend talking with one of our RamseyTrusted insurance pros. They’re long-term care insurance experts who actually enjoy talking about this stuff—and answering your questions.

4. Your policy might not cover the care you need.

There’s always a chance that your carrier could deny your claim for coverage. That’s why it’s important to choose the right policy and carrier. Work with an insurance advisor who knows the industry and can help you make the best choice.

5. You might not end up needing it.

The truth is, not everyone will need long-term care. Maybe you never set foot in a nursing home or need to hire a caregiver. Great! But life is unpredictable, and long-term care insurance is a helpful layer of protection in case you do need help. As we’ve seen, most people will need some form of care sooner or later.

The Pros and Cons of Long-Term Care Insurance

What to Consider in a Long-Term Care Policy

There’s a lot for LTC insurance shoppers to consider, from cost to the quality of the coverage. Let’s look at several of the main factors in your choice.

Length of the Policy

As part of the application process, you’ll need to decide on your term length (how long you want your coverage to last). Most people need two to four years of coverage.  

Inflation Protection

Inflation is real. And adding an inflation rider to your long-term care insurance policy may be worth it. The rider affects your policy in two ways. First, it increases your available benefit over time at an annual rate defined in your policy (typically around 3–5%).¹² But second, it will increase your cost a lot—anywhere from a 20% jump to more than doubling your premiums.¹³

The upside is that your benefit will compound over the years—so by the time you need to tap into it, your coverage will be higher. That compound growth is a great way to hedge against inflation.

Amount of Daily Benefit

The daily benefit is the maximum amount your insurance company will pay per day for care. Check the typical costs of care in your state to get an idea of how much you might need. For example, if your daily benefit is $150 but care in your area usually costs much more than that, you should probably bump up your daily benefit amount.

Waiting Period

The waiting period (sometimes called the elimination period) is the time before the insurance carrier begins paying for care after you’ve qualified for it. You can pay more to have no waiting period, or you can set it anywhere between 30 and 90 days and pay less in premiums. The longer the period, the lower the premium. Just keep in mind that any care you need before that period ends will have to be paid out of pocket.

When Is It a Good Idea to Get Long-Term Care Insurance? 

We recommend getting long-term care insurance when you turn 60. Your odds of needing it before age 60 are super low, and you’ll still be likely to qualify for coverage.

Of course, the longer you wait, the higher your chances of being denied coverage. In fact, research shows that around 20% of people in their 50s were denied. But that number jumps to 30% for ages 60–64, 38% for ages 65–69, and a whopping 47% for ages 70–74.¹⁴

Even if you just have a few small health concerns like mobility limitations or pending medical tests, it might be difficult to get coverage after a certain point. Insurance companies are all about managing risk. And if they deem you to be too risky, it will be tough to find affordable coverage.

If you absolutely can’t qualify for a traditional long-term care policy, you could consider a hybrid plan, which combines LTC coverage with life insurance. We almost never recommend those because they’re far more expensive than traditional plans—and a lot more complicated.

Hybrid plans also let you use the life insurance death benefit early to help pay for long-term care. While we’d almost always steer you away from them, even a hybrid plan is better than having no plan at all.

So, you’ve decided long-term care insurance is worth it, but how do you actually buy it?

Well, you can shop around on your own and compare plans—or you can work with a RamseyTrusted independent insurance agent. These pros are Ramsey-vetted, and they’ll look at your specific situation to help you find the best policy.