When it comes to long-term care insurance (LTCI), many people feel that if they have the available assets, then self-insuring against future long-term care expenses is more logical than paying long-term care premiums. However, that might not be the case for everyone.
What is long-term care insurance?
Long-term care insurance is designed to cover the cost of assistance with daily activities if you become unable to manage things like bathing, dressing, cooking and getting around yourself. Long-term care can involve anything from in-home assistance to transportation, or residence in a specialized care facility like a nursing home or assisted living. Most services related to long-term care are not paid by Medicare or private health insurance, leaving the financial and logistical burden to you and your loved ones.
Not unlike other insurance policies you own, LTCI is a vehicle in which to transfer risk. And when you look at the staggering costs of becoming chronically ill or disabled at any age, the benefits of an LTCI policy can help preserve what you've worked so hard to accumulate for a more comfortable, more confident retirement.
Pros of long-term care insurance
When evaluating if LTCI is right for you, here are some of the advantages to consider.
Asset protection
— By transferring a portion of this risk, LTCI may be preferable to the self-insured option in order to protect your assets. For example, nursing homes, assisted-living centers, and home health care are becoming increasingly expensive, and there is no way to predict for how long you may need any one of these services. Think for a moment about what it would actually cost out of pocket to self-insure compared to the benefits provided by an LTCI policy. With LTCI insurance coverage, you may be able to preserve your hard-earned assets to support other retirement needs and/or leave an inheritance to your loved ones.Preserve your independence
— If you envision growing old in your own house, surrounded by family and neighbors, LTCI may help you afford in-home care that allows you to remain in your own home as opposed to moving to a facility. This would allow you to enjoy the comfort of familiar surroundings and maintain your independence.Flexibility regarding care options
— Long-term care can get expensive quickly. Long-term care coverage may provide the financial support that allows you to access the kind of care you desire as opposed to simply the least expensive option, whatever that may be. This type of flexibility can result in a more desirable, comfortable situation during a challenging time.Financial security
— Having long-term care can provide peace of mind that, if or when the time comes, you will have the financial resources you need to access long-term care. With statistics indicating a high probability that you will require long-term care at some point during your lifetime, this type of assurance may be a worthy investment.
Cons of long-term care insurance
While there are many advantages of LTCI, there are also some drawbacks to consider as you evaluate if this type of coverage is right for you.
Rising cost of premiums
— Particularly if you’re looking to invest in LTCI when you’re older, premiums can be expensive. You may find it difficult to find the room for LTCI premiums in your budget or be forced to choose between two different important types of coverage such as general life insurance and long-term care insurance.Potential difficulties qualifying
— LTCI involves medical underwriting, meaning you will be subject to a series of medical questions and likely a medical exam. Certain conditions including recent medical incidents, certain chronic illnesses and neurological disorders may cause your application to be denied or can raise premiums significantly.May not cover all expenses
— LTCI policies outline specific coverage limits. Arranging long-term care is a dynamic process and there may be expenses associated with the care you need that are not covered by insurance. There may also be daily limits placed on coverage, leaving you to pay additional expenses out of pocket.Loss of premiums if the policy goes unused
— Many long-term care policies are “use it or lose it,” meaning you pay premiums to maintain the policy, but if you never experience a need for long-term care, the policy terminates and the insurance company keeps your premiums.
How much does long-term care cost?
There is no simple answer to the question of how much long-term care costs. The first thing to determine is the type of long-term care coverage you’d like to consider. It may be possible to get a long-term care rider with a traditional life insurance policy. Another option is a traditional long-term care policy, which is dedicated exclusively to providing coverage in case of a medical event that qualifies you for long-term care. You may also have the possibility of accessing group long-term care coverage through your employer or other member association. Typically, group coverage is the most inexpensive of these three options, but it also provides the least coverage. The cost of a long-term care rider on a life insurance policy and traditional long-term care insurance varies depending on multiple factors. Your age and health history factor into the price of premiums for these types of coverage. When considering when to buy LTCI, think about applying while you are young and healthy to help keep premiums low.
Average cost of long-term care insurance vs. long-term care
The big question is how much does long-term care insurance cost compared to the expense associated with long-term care if and when you need it?
While the cost of long-term health care depends on the type and duration of care, the provider, and your location, the estimated median annual cost of in-home care in the United States in 2024 was $77,792 for a Home Health Aide.1 The average national annual cost of a private room in a nursing home that includes full-time care, specialized physical therapy, and provides full access to a variety of amenities is $127,750.2 When discussing limits for your long-term care needs, be sure to take into account the type of care you prefer and the type of facility where you’d like to live if you require round-the-clock care. Clearly, regardless of the type of care involved, LTC gets expensive quickly!
According to the 2024 American Association for Long-Term Care Insurance (AALTCI) annual Price Index survey, the average annual premium for a $165,000-benefit policy with no inflation protection is $950 for a single male (age 55) and $1,500 for a single female (age 55).3 For an investment of $37,500 over 25 years, a woman could secure coverage through 80 years of age for a fraction of the benefit provided in case long-term care is required.
There are a number of important objectives in measuring how much LTCI you might need. When determining your limits, what's often overlooked is your current standard of living. More often than not, the “average” costs used to calculate long-term care expenses may not be congruent with your lifestyle preference or be enough to offer you the ability to select the type of facility or provider you prefer.
An insurance policy has its limits. And if you have a LTCI policy (or have been thinking about purchasing one) it's important to consider policy limits in context of your desired standard of living.
Long-term care insurance alternatives
When it comes to long-term care insurance, it’s a good idea to understand all of your options so that you can assess which solution may work best for your particular situation.
Many individuals choose to self-insure by earmarking funds in their retirement savings in case long-term care is required. However, with the cost of inflation and other unexpected expenses presenting themselves as you age, it can be difficult to foresee the true cost of long-term care. Others plan to rely on family members to act as caregivers. However, this can place financial and relational strain on families, creating undesirable consequences.
A hybrid life insurance with long-term care policy offers some degree of long-term care coverage while also ensuring a death benefit is paid to your loved ones in case of your death. The nice thing about this option is that, unlike traditional long-term care policies, you benefit from the premiums you pay in the way of life insurance coverage rather than losing your premiums if you invest in traditional LTCI and never require coverage.
Long-term care annuities include LTC riders that can be added when purchasing the annuity or, in some cases, attached to an existing contract based on its terms. These riders provide additiona funds from your annuity if a qualifying event makes long-term care medically necessary. Once eligibility is confirmed, your annuity payments increase for a set period to help cover long-term care expenses.
Group long-term care policies may be available through your employer or member association such as unions and membership organizations. These types of policies are often less expensive than individual policies because the insurance company is underwriting the risk across a large group of individuals. Benefits are often limited and may not provide sufficient coverage to fund more than a small portion of your long-term care expenses.
Frequently asked questions about long-term care insurance benefits
Here are some quick answers to common questions about LTCI benefits.
What does long-term care insurance cover?
LTCI is designed to cover the expenses associated with long-term care, whether that is in-home nursing assistance, senior daycare, assisted living or nursing home facilities. Depending on the type of coverage and the specific provision of your contract, LTCI may also cover other related care expenses such as physical therapy and transportation. Note, however, that there is likely a cap on expenses. Your policy may cover a limited array of care options or may specify a per diem maximum.
How much coverage do I need?
It’s impossible to predict the future and what health conditions, accidents or other situations may arise. However, understanding that according to the U.S. Department of Health and Human Services, 70% of senior adults who survive after age 65 will develop disabilities that require them to have long-term services and support, it is likely that at some point you will require some level of care assistance.4 The next thing to think about is your care preferences. Would you rather move into an assisted living facility and enjoy the social aspects of a senior community, or would you prefer to remain in your house and access in-home care for your comfort? Research the average costs of the types of care you’re interested in and then subtract your estimated monthly retirement income from that to identify the financial gap between the forecast expenses and available income. That number should provide a rough guide as to how much long-term care coverage you need to access the services you desire.
When should I buy long-term care insurance?
If you’re thinking about long-term care insurance, consider applying in your 50s or early 60s while you’re still in good health. Many insurers impose age limits, and as health declines, qualifying for coverage can become more challenging and significantly more expensive.
Can I combine LTC with life insurance?
You’ll need to check with the insurance company and the provisions of the specific life insurance policy. However, in many cases, long-term care riders are available with life insurance policies. For an additional premium, your life insurance policy will distribute payouts in case you experience a medical event that qualifies you for long-term care.
It’s wise to consider the need for long-term care in the process of planning for retirement. If you need some guidance thinking through this complex topic, reach out a qualified financial professional and visit the Protective Learning Center for more information on preparing for retirement.
Sources:
- Cost of Care: Trends and Insights, Genworth, 2025.
- Cost of Care: Trends and Insights, Genworth, 2025.
- National Council on Aging, “How much does long-term care insurance cost and is it worth it?” February 13, 2025.
- U.S. Department of Health and Human Services, “What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?” April 3, 2019.
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