What Is Long-Term Care Insurance?

According to the US Department of Health and Human Services, the typical person who turned 65 in 2020 has about a 70% chance of needing some sort of long-term care or assistance during their older years. And the costs of this type of care are high — the average person needing care at home will spend about $54,000 per year or $4,500 per month, and a person who needs a room in a care facility will pay an average of about $96,000 per year or $8,000 per month according to 2022 data from HCG Secure.

With costs so high, paying for long-term care can quickly drain your savings and limit your options for higher-quality care. Long-term care insurance can play an important role in ensuring you or a loved one spends the last chapters of life in comfort, but you need to know the ins and outs of this product before deciding if it’s right for you.

What is long-term care insurance?

Long-term care insurance can help you cover the expenses associated with getting skilled care for an extended amount of time for chronic health conditions. “What long-term care insurance does is it provides more day-to-day things,” says Peggy Haslach, a certified financial planner at Finity Group.

It’s separate from health insurance, including Medicare, which generally doesn’t cover these costs. While Medicaid can cover costs, not all facilities accept Medicaid payments.

You don’t have to move to a facility to gain the benefits of long-term care insurance — it can also cover the cost of care at home, including training for family members and in-home assistance. Long-term care insurance may also cover home modifications that make your living space more accessible and comfortable, such as ramps and shower handles.

How does long-term care insurance work?

UFB Premier Savings

UFB Premier Savings is offered by Axos Bank, a FDIC Member.

  • Annual Percentage Yield (APY)

  • Minimum balance

  • Monthly fees

  • Maximum transactions

    No max number of transactions; max transfer amount may apply

  • Excessive transaction fees

  • Overdraft fees

    Overdraft fees may be charged, according to the terms, but a specific amount is not specified; overdraft protection service available

  • Offer checking accounts?

  • Offer ATM cards?

What are long-term care insurance costs based on?

Several factors go into how much you’ll pay for the policy, including:

  • The age you are when you buy the policy
  • your gender
  • The maximum amount it will pay per day
  • The number of years a policy will pay for
  • The lifetime maximum amount of the policy
  • Any additional benefits you include

It’s worth noting that women tend to pay more for a policy. Haslach notes that women tend to live longer than men on average and usually retire with fewer assets.

How do you get long-term care insurance?

Mutual of Omaha Life Insurance

  • cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Mutual of Omaha offers term, whole, indexed universal life and universal life policies, giving lots of options.

Guardian Life Insurance

  • cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Guardian offers a variety of policies, including term, whole and universal. It also offers term policies that can be converted into whole or universal life policies, along with strong financial strength ratings.

Traditional, standalone long-term care insurance is also available, although it’s becoming more rare. These policies aren’t tied to life insurance or annuities and are purchased separately.

Finally, it’s possible to get hybrid long-term care policies, which have long-term care benefits on top of a life insurance policy or annuity.

Do I need long-term care insurance?

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Editorial Notes: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s own, and have not been reviewed, approved or otherwise endorsed by any third party.