Is Long-Term Care Insurance Worth It? Find Out Here

As people age, there’s a high likelihood that they’ll require assistance with daily activities or need long-term care services. According to recent government data, around 70% of seniors in the United States will need long-term care support or services.

However, accessing these essential services can be incredibly costly. Traditional health insurance plans do not cover the costs associated with long-term care. To ensure financial protection and avoid depleting retirement savings, it’s crucial for individuals to consider purchasing long-term care insurance specifically designed to cover these expenses.

In this Pacific Prime article, we will answer whether or not long-term care insurance is worth it, its pros and cons, and the factors to consider before securing long-term care insurance.

Is Long-term Care Insurance Really Worth It?

Long-term care insurance offers coverage for nursing home care, home health care, and personal or adult day care for individuals aged 65 or older, as well as those with a chronic or disabling condition that needs constant assistance.

As you approach your golden years, there is a significant chance that you will require long-term care services once you turn 65, according to figures gathered by the Administration for Community Living (ACL).

The data reveals that men will need long-term care support for an average of 2.2 years, while women, on average, will require it for a longer period of 3.7 years. Remarkably, a quarter of American seniors may need care services for at least five years or more, regardless of gender.

The Average Cost of Care Support and Services in the United States

Without appropriate long-term care insurance coverage, you’ll have to pay these expenses out of your pocket, which can be exorbitantly expensive.

To provide a clearer picture of the potential costs associated with care support and services, consider the following information from the industry leader Genworth:

The Cost of Long-term Care Insurance

The table below contains data from the American Association for Long-term Care Insurance’s (AALTCI) latest price index. The figures show how much you can expect to pay in annual premiums for a long-term care insurance policy worth USD 165,000 at age 65.

The costs are categorized by gender and marital status, and the data also includes the cost of policies with inflation growth provisions.

Who Will Benefit the Most From Long-term Care Insurance?

The eligibility criteria for long-term care insurance benefits vary across states, but most require certification that an individual is unable to perform at least two of the six essential activities of daily living (ADL), which include:

• Eating: Feeding yourself
• Bathing: Getting in and out of the bathroom to clean yourself
• Dressing: Putting on or taking off your clothes
• Continence: Controlling urinary and bowel movements
• Toileting: Getting on and off the toilet
• Transferring: Getting in and out of a bed or a chair

Additionally, individuals suffering from certain debilitating conditions may qualify for long-term care coverage. Those conditions include:

• Alzheimer’s disease
• Schizophrenia
• Dementia
• Multiple sclerosis
• Parkinson’s disease
• Lou Gehrig’s disease (amyotrophic lateral sclerosis)

These chronic and progressive conditions often require specialized care and support services, which long-term care insurance can help cover.

The Best Age to Secure Long-term Care Insurance

While the optimal age range for single individuals to purchase long-term care insurance is the early to mid-60s, married couples are advised to consider obtaining coverage around the age of 55.

Many industry experts recommend purchasing long-term care insurance at a younger age to access lower premiums, despite having to pay for the policy over a longer period. Therefore, obtaining coverage when you’re still employed and receiving a steady income is recommended.

Premiums tend to increase significantly as individuals age, making it ideal to purchase a long-term care policy during the working years. Even if you reach the age of 65 without prior coverage, securing long-term care insurance should still be considered.

Although premiums may be higher when purchased during these age ranges compared to the late 40s or early 50s, the overall premiums paid until reaching the age of 80 years will be lower.

The Cons of Long-term Care Insurance

Long-term care insurance can be costly, making it less accessible for those with low incomes. One of the major drawbacks of long-term care insurance policies is the risk of losing all the premiums paid over the years if the policyholder does not require long-term care services in the end.

Do note that the traditional policies operate on a “use it or lose it” basis, meaning that if the insured person does not need long-term care, they will not receive any benefits despite paying premiums for many years.

As an alternative, we recommend considering hybrid life insurance policies. These multi-use policies provide a death benefit, but can also pay out if the policyholder is diagnosed with a terminal illness or requires long-term care services.

Therefore, hybrid policies have the advantage of allowing the policyholder to use the benefits in some capacity, also building cash value over time.

Factors to Consider When Securing Long-term Care Insurance

There are several key factors to consider when selecting a long-term care insurance policy that can provide adequate coverage for your future needs to ensure it aligns with your potential care needs, financial situation, and overall preparedness.

Here are the crucial factors to look out for when securing long-term care insurance:

Coverage Amount

Determines the level of care services you may need, whether it’s in-home care or a private nursing facility. This will impact the benefit amount needed and the associated costs.

Benefit Period

Long-term care insurance policies offer term lengths ranging from two years to lifetime coverage. Your medical history and family’s health background can help guide the appropriate benefit period.

Age at Purchase

Obtaining coverage at a younger age can result in lower annual premiums, although you’ll be paying for a longer period. Conversely, purchasing closer to senior age may involve higher premiums but a shorter overall payment duration.

Renewal Age Limit

While there is no definitive age cutoff after which you can no longer purchase long-term care insurance, most insurance providers typically have an age limit within the range of 75 to 80 years old for issuing new long-term care policies.

Elimination Period

Insurers typically impose a waiting period of 30, 60, or 90 days before benefits and reimbursements begin. During this time, you’ll need to cover medical expenses out-of-pocket. Opting for a longer waiting period can potentially lower your premiums.

Inflation Protection

To safeguard against rising medical costs due to inflation, insurers offer add-ons that increase your daily benefits over time, albeit at a higher premium cost.

Tax Advantages

Many companies offer tax-qualified long-term care insurance policies, which provide tax-free benefits and deductible premiums, with the deduction amount varying based on the policyholder’s age.

Insurer Reputation

Thoroughly researching and assessing the financial stability and commitment to providing quality care to potential insurers can be crucial before making a selection.

Let Us Help You Find the Best Plan

With over two decades of experience as a renowned insurance broker, Pacific Prime’s team of insurance specialists are experts in helping seniors secure comprehensive health insurance coverage, guiding you through the process with expert knowledge and impartiality.

Contact us today to get a free quote! We will be on hand and ready to answer any of your queries about long-term care insurance.

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Veerabhatr Sriyananda

Content Writer at Pacific Prime

Veerabhatr is a content writer with over 6 years of experience with a particular penchant for storytelling and marketing, both in print and online. He now works with an experienced team of writers at Pacific Prime, aiming to shed light on the essence and benefits of insurance for companies and individuals by creating engaging, informative content across multiple platforms.

After obtaining his Bachelor’s Degree in Social Sciences, International Relations from Mahidol University International College, Veerabhatr has forged his career as a content writer in the travel, lifestyle, and real estate industries, writing in both English and Thai. He now continues to hone his skills as a writer at Pacific Prime, looking to engage and educate the audience by simplifying insurance.

Writer by day, and a DJ by night, Veerabhatr is a staunch music lover, and listens to all spectrums of genres available. He also loves to drink beer (moderately), eat all types of food, go to the beach, and learn about different cultures across the globe. He is also a die-hard fan of football and motorsports.

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