How Should You Buy Long-Term Care Insurance

When it comes to insurance, most options are abundant and relatively affordable. Whether you want to protect your home, car, or other assets, all you have to do is get a policy and pay your monthly premiums. 

With long-term care insurance, however, the process is a bit more complicated. While this type of coverage can be useful, it can come at a higher cost. If you’re interested in looking for long-term care insurance, you need to know everything about how it works. This article will discuss the ins and outs of this protection so you can make the right decision for yourself and your loved ones. 

What is Long-Term Care Insurance?

While it would be nice to imagine staying fit and healthy forever, many individuals will require assistance in old age. In some cases, this extra help may be minimal, such as having someone buy groceries or do chores around the house. 

However, some people will need medical assistance, either at home or in an assisted living facility. Unfortunately, the costs of this kind of care are wildly expensive, and they only go up annually. 

Here is a quick breakdown of the yearly prices associated with various forms of long-term care: 

  • Adult Day Health Care – $18,000
  • Homemaker Services (Cleaning and Errands) – $48,000
  • Assisted Living Facility – $48,000
  • Home Health Aide – $50,000
  • Nursing Home Care – $90,000 to $100,000

As you can imagine, these costs will accumulate quickly, meaning that if you don’t have sufficient funds saved, you could run out of money sooner rather than later. Unless you are earning substantial passive income during retirement, these expenses can become unmanageable. 

However, with long-term care insurance, you could be financially protected from these costs, at least partially. Policies help pay for various services and could save you from substantial out-of-pocket payments. 

What Does Long-Term Care Insurance Cover?

Although long-term care is related to your health, this type of insurance doesn’t usually cover medical bills. Instead, it’s designed to pay for everything else pertaining to your situation. 

For example, let’s say that you have to move into a nursing home. Your long-term care policy would cover the costs of your room and board, including meals, check-ups, and any common elements of your stay. 

However, if you got sick and had to be treated in a hospital or get surgery, those medical bills would be covered by your health insurance instead. 

Fortunately, long-term care insurance typically pays for all the different options we listed above, including adult daycare, nursing homes, and homemaker services. So, whether you need a little assistance or a lot, your policy can protect you financially. 

Advantages of Long-Term Care Insurance

Before looking at policies or talking with insurance agents, it helps to know what to expect from this kind of insurance. Here are the top benefits of buying one of these plans: 

  • Cost Savings – Although long-term coverage is expensive, it is far cheaper than paying for different care options out of pocket. If you have to move into an assisted living facility, you will be glad to have insurance. 
  • Peace of Mind – Around 14 percent of individuals over 65 will need long-term care for five years or more. If you’re worried about being one of those people, having insurance can help ease the tension of potential financial worries. 
  • Flexibility – Since these plans can pay for different care options, you don’t have to settle for one or the other. Instead, you can choose the long-term treatment that works best for your needs. 

Disadvantages of Long-Term Care Insurance

Unfortunately, while these plans can look good on the surface, they can come with some significant drawbacks. Here are a few reasons why you might not want to get a policy. 

High Premiums

Compared to other forms of insurance, you’ll pay a lot of money for long-term care. The sooner you sign up, the more you’ll pay before having to file a claim. For example, if you get a plan at age 50, it might be 20 years before you’ll need assistance. 

To make matters worse, monthly premiums could go up. In some cases, you could be looking at a double-digit increase (i.e., 11 percent). If that continues, you may not be able to afford coverage before you have a chance to take advantage of it. 

Lack of Options

While long-term care insurance was relatively standard in years past, fewer and fewer companies are offering it today. The primary issue is that these policies are not cost-effective for the insurer. Since filing a claim is almost inevitable, insurance companies often pay more than they receive in premiums. 

This problem also means that you could buy a policy today and get dropped by your insurer in the next 10 or 20 years. Even worse, what happens if you are already receiving long-term care and your insurance company cancels your plan? 

Hard to Qualify

One way that insurers mitigate their losses with long-term insurance is to only cover healthy individuals. So, when applying for this coverage, you can get denied easily. Since the Affordable Care Act does not protect this type of insurance, companies can have strict rules that change without warning. 

If you have any significant medical conditions (i.e., heart problems, cancer), you’ll probably get denied. Your age and health can also be factors, meaning that you want to apply when you’re relatively young (i.e., age 60). According to the Insurance Information Institute, 19 percent of applicants at age 60 are denied. 

Other Considerations When Comparing Long-Term Care Insurance Plans

Although there are some compelling pros and cons to this kind of coverage, they don’t exist in a vacuum. Here are some extra points to consider when deciding whether or not to get a policy: 

  • Health and Lifestyle – If you take care of yourself and don’t have any substantial genetic problems, you might not need long-term care for a while. If that is the case, why pay for something you won’t use in 20 or 25 years? 
  • Family Situation – While it can be hard to ask relatives for help, many of them will pitch in willingly. If you only need mild assistance with daily activities, you may not need to pay a professional. 
  • Income Level – Since long-term care will likely kick in during retirement, the primary question is, “how large is your nest egg?” If you have plenty of money, you don’t need to worry about insurance. However, if your retirement income is limited, you might not be able to pay the high premiums anyway. 

You can also lower your insurance premiums by choosing a few different options. For example, the reason for annual rate increases is to keep up with inflation. If you limit the inflation rate, you can pay less per month but receive less money when filing a claim. Other cost-saving options include a longer waiting period before benefits start and a lower coverage amount. 

That said, while it’s tempting to save in the short term, it could be disastrous later on, so you will need to weigh the risks. 

Alternatives to Long-Term Care Insurance

If you’re unsure about long-term coverage, you can figure out alternative ways to avoid high expenses later in life. Here are a few alternatives to this kind of insurance: 


If you save enough money for retirement and have supplemental income (i.e., from investments), you might be able to cover long-term care costs out of pocket without draining your accounts. Plus, since you’ll likely need assistance after age 75 or 80, you can build even more financial protection during retirement. 

Family Assistance

If you want your children or relatives to assist you, you’ll need to discuss options beforehand. Asking someone to move in and take care of you full-time is too much, so you’ll have to figure out what to do in various situations. After talking it out with your family, you can determine the best course of action. 

For example, you may decide to buy reduced long-term care insurance to supplement any help you get from relatives. 

Bottom Line: Is Long-Term Care Insurance Worth It?

Typically, any form of insurance is worth the cost, but long-term care coverage requires much more consideration. Overall, this protection is ideal for those who have enough money to pay the premiums but not enough to pay for assisted living expenses out of pocket. If you’re too far on either side of the spectrum, you may want to find an alternative. 

Contact NextGen Life Insurance Today

No matter what kind of insurance you need, the best way to find the right policy is to compare rates and companies. We make it easy to get the information you need to make the best choice for yourself and your loved ones. Get your free quote today or call us at 646-216-4199 to get started.