Enter for a chance to win $5,000!

Skip to Main Content

Who Needs Long-Term Care Insurance?

Long-term care can be a touchy subject. It’s not exactly something you want to talk about at the dinner table. No one wants to think about themselves or their loved ones being unable to live on their own. 

But is long-term care insurance really necessary? And how do you know if you actually need it? Will Medicare cover these costs as you age, or can you rely on friends and family for care?

You’ve got questions, we’ve got answers! We’ll dig into who needs long-term care insurance so you can put together a solid plan for your future.

What Is Long-Term Care Insurance?

Long-term care insurance covers the costs related to a nursing home stay, assisted living facility, or caretakers coming to your house when someone gets older and starts dealing with health issues. Long-term care is defined as any care that is longer than three months.

Long-term care insurance also covers things like adult day care services, in-home care, home modifications and care coordination (or management). For many people, it allows them to protect their nest egg while also living in their home longer. It’s also one of the eight types of insurance you need.

Who Needs Long-Term Care Insurance?

Most Americans will need some kind of long-term care, and long-term care insurance is the best way to pay for it. In fact, 65-year-olds today have a 70% chance of needing long-term care, and an estimated 20% of Americans will need it for longer than five years.1 Yet only about 7.5 million Americans have long-term care insurance.2 The only group of people who might not need long-term care insurance are those who have a high enough net worth to self-insure.

heart

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

Long-term care insurance is crucial since long-term care is super expensive and costs are only increasing. The average cost in the United States of just one month in a nursing home is $7,698!2 According to the Alzheimer’s Association, the estimated cost for care in the final five years of life is $367,000 for people with dementia and $234,000 for those without.3 The average American will pay $172,000 for long-term care.4 And while regular health insurance won’t cover these costs, long-term care insurance will.

Now, you might be thinking: What about government programs? Can’t they help? Don’t make the mistake of believing Medicare will cover long-term care costs. It won’t. And while Medicaid—the government program designed for people who truly don’t have any money—will cover some long-term care expenses, it should never be your first choice because you’ll have to spend all your assets before you’ll receive help.

Long-term care insurance is the best solution. It’s a great way to offset the increasing costs of long-term care as you age. It also gives you peace of mind and will protect your savings you worked so hard to build. You’ll know that if you do become ill, you can afford the care you need and still have enough money left over so you and your spouse can eat. Plus, your kids won’t be burdened with huge payments for your care.

How Much Does Long-Term Care Insurance Cost?

Depending on factors like your age, gender, health and family health history, the cost of long-term care insurance can be affordable. For others it can be more expensive. The cost also varies depending on where you live and what kind of policy you pick.

The average 55-year-old man will pay $1,700 per year for a three-year policy that covers $164,000 in care and a daily max of $150.5 The average 55-year-old woman will pay $2,675 for the same coverage.6 Because women tend to outlive men, insurance companies require ladies to fork over more money. The average 55-year-old couple will pay $3,050 a year for a combined policy.7 The couples discount ranges from 15% to 30% depending on where you live.8

Also realize that long-term care insurers are allowed to increase rates after you sign up. So don’t be surprised if your rates climb. But here’s a silver lining: Long-term care insurance premiums are tax deductible up to certain limits. So you’ll save some money there.

No matter what you end up paying, long-term care insurance still gives you good bang for your buck since there’s a good chance you’ll need long-term care later in life.

When Should I Get Long-Term Care Insurance?

Dave suggests waiting until age 60 to buy long-term care insurance because the likelihood you’ll file a claim before then is slim. 

About 95% of long-term care claims are filed by people older than age 70, with most new claims starting after age 85.9 That’s why it doesn’t make sense to start a long-term care insurance policy any earlier than 60. You don’t want to be dishing out money for an extra decade—for no reason.

But keep in mind that insurance is not one-size-fits-all. You need to do what’s right for you and your family. If you or your spouse has a family history of illness at a young age or health issues that are cropping up, you might need to get long-term care insurance earlier. The peace of mind you’ll have is worth more than any cash you’ll save on premiums. But don’t do it because you’re afraid of what might happen. If it’s not likely to happen, wait until you’re 60.

You may have heard you’ll pay less and lock in a low premium if you buy your policy at 50. That might be true, but we would never tell you to buy something based solely on how much the monthly payment is. Instead, you should be thinking about what you need, when you need it.

Is Long-Term Care Insurance Worth Buying?

Yes, long-term care insurance is definitely worth it. In fact, it’s a bargain considering what you get in return. The reality is that most Americans simply will not be able to afford the sky-rocketing costs of long-term care. Or they’ll have to dip into their savings or retirement funds to pay for it. This is not a good plan.

Long-term care insurance also allows you to live in your home longer. This is because your insurance company will pay for things like in-home care and home modifications (think wheelchair ramp, etc.). 

Another benefit is that your family and friends won’t be burdened with every aspect of care. You can spend more quality time with them without relying on your daughter or friend to come over every day to help.

With long-term care insurance, you’ll enter your golden years with a plan. And your quality of life will be higher than if you were constantly trying to cut costs.

Whatever you end up paying in monthly premiums, it’s well worth the benefit later when you start getting those long-term care bills in the mail.

The Best Way to Get Long-Term Care Insurance

So, what’s the best way to find long-term care insurance? Go to an independent insurance agent. They’ll shop around several different long-term care companies and get you quotes that can save you thousands of dollars and loads of unnecessary worries. Long-term care is an important decision, so make sure you get a professional on your side!

Don’t know where to look? Our Endorsed Local Providers (ELPs) are trusted insurance experts fit to answer all your questions. Your ELP is RamseyTrusted and will listen to your needs and help you make the right decision for you and your family—and your budget.

Contact an independent insurance agent today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Do You Have the Right Coverage? 

Do You Have the Right Coverage? 

Find out with our free 5-Minute Coverage Checkup!
Take the Coverage Checkup

Do You Have the Right Coverage?  

Find out with our free 5-Minute Coverage Checkup!
Take the Coverage Checkup