What to Know About Long-Term Care Insurance

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Long-term care insurance is a type of private insurance that helps cover services and support like assisted living facilities, nursing homes, adult day care or in-home care.

While it may be difficult to imagine now, you may need long-term assistance later in life that friends or family won’t be able to provide. This is why planning for long-term care costs is an important part of any financial retirement strategy. We can help you better understand long-term care insurance and how a life insurance policy can be a good alternative to long-term care insurance.

What does long-term care insurance cover?

Long-term care insurance helps pay for long-term needs not covered by regular health insurance, Medicare or Medicaid and is available to individuals age 65 or older or to those who have a chronic and/or disabling condition requiring constant supervision. This includes:

  • Personal care provided for you in your home (in-home care)
  • Care provided in a nursing home or assisted living facility
  • Care provided at an adult daycare facility 

The rates you pay for this type of insurance depend on a variety of factors such as your age, health status and the amount of coverage you choose. 

You typically qualify for the benefits of a long-term care policy when you can’t perform at least two activities of daily living, such as bathing, eating or getting dressed on your own, or you have dementia or another cognitive impairment. One downside to long-term care insurance, however, is that the price is not always guaranteed to stay the same and often increases as you get older.

How much does long-term care cost?

Long-term care varies in cost based on the type of care needed and where you live. In general, here are some average long-term care costs from 20211:

  • Home health aide: $61,776 per year
  • Assisted living care facilities: $54,000 per year
  • Private room in a nursing home: $108,405 per year

How much does long-term care insurance cost?

The monthly premiums for long-term care insurance typically range from $250-$1,000 per month. The exact premium amount depends on the type of policy, the coverage amount, your health status and age. 

The younger you are, the less expensive a long-term care insurance rate will be. However, buying long-term care insurance too young can mean paying premiums many years before you actually need it. It’s important to look at all your options before deciding if long-term care insurance is right for you.

Long-Term Care Insurance Alternative: A Fully-Underwritten Permanent Life Insurance Policy

A fully-underwritten permanent life insurance policy is a strong alternative to a long-term care policy. With such, you have the option of adding a chronic or critical illness insurance rider to your policy to enhance your coverage. 

A chronic or critical illness rider provides additional coverage for your long-term care needs because it allows you to access your death benefit while you’re still alive should you become chronically ill. This rider can help cover the same type of costs as long-term care insurance, but still offers the flexibility that your beneficiary will receive any remaining balance of the death benefit after you pass away. 

In addition to a chronic illness insurance rider, a key feature of permanent life insurance policies is the cash value built alongside maintaining the death benefit. This cash value component can be used to cover the same costs covered by a long-term care insurance policy.

Frequently Asked Questions about Long-Term Care Insurance

If you have long-term care insurance questions, we have answers.

What is the biggest drawback of long-term care insurance?

The biggest drawback of long-term care insurance is the high cost of the insurance premiums and the fact you will pay those high premiums for many years and not use the coverage.

When should you shop for long-term care insurance?

Most experts recommend shopping for long-term care insurance between the ages of 50-65 to get the lowest possible premium rate. Most long-term care policy benefits are enacted when people are in their 80s. 

Note: waiting too long to shop for long-term care insurance can be risky, as your age helps determine the cost of the policy. This is why you have to weigh your options carefully.

What is typically covered in a long-term care insurance policy?

Long-term care insurance covers care provided in a variety of settings, including:

  • Your home
  • Adult daycare/day service centers
  • Assisted living facilities
  • Hospice care
  • Respite care
  • Nursing homes

Long-term care covers: 

  • Occupational, speech, physical and rehabilitation therapy
  • Help with personal care, such as getting dressed, bathing, and going to the bathroom

Do long-term care premiums increase as you age?

Yes, long-term care premiums increase as you age. Premium rates often go up 2-4% every year for people in their 50s and 6-8% for people in their 60s.

Is long-term care insurance tax deductible?

Most long-term care policies are tax-qualified policies that come with tax-free benefits and premiums that are able to be deducted from your taxes. Tax-free benefits mean that policyholders are generally not taxed on benefits received from the policy. 

Qualified long-term care expenses that exceed 7.5% of your annual gross income are also eligible to be deducted from your taxes. For an expense to be qualified, it must have been used to treat, cure, or alleviate a health condition, which includes the inability to care for oneself.

Let SelectQuote Help You Find the Best Permanent Life Insurance Policy For You

There are many options and types of coverage when it comes to permanent life insurance. SelectQuote is here to help, whether you’re looking for an alternative to long-term care coverage or just life insurance in general.

We’ll take the time to understand your needs and can shop some of the most trusted life insurance companies in the nation, finding you multiple quotes and coverage options in the time it would take you to shop just one. Our technology allows us to shop dozens of policies in minutes, presenting you with options tailored to your needs so you can find the right plan for you.


1 https://www.genworth.com/aging-and-you/finances/cost-of-care/cost-of-care-trends-and-insights.html

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