Long-term care insurance

For most people, medical needs change as you get older. According to data from the American Association of Retired Persons (AARP), more than 50 percent of Americans over age 65 will eventually need some form of long-term care. To help you pay for the cost of long-term care, such as a nursing home, assisted living facility or home nurse, having long-term care insurance may be beneficial.

What is long-term care insurance?

Long-term care (LTC) insurance covers the cost of personal support for people who need assistance with activities of daily living (ADLs), such as bathing, dressing and eating. This care may be given in a senior living home, assisted living facility, daily care program or even at home. You may need this care because of a chronic condition or because of an injury or other non-permanent condition.

Having LTC insurance may be valuable because it covers many expenses that health insurance doesn’t typically cover. For example, Medicare and Medicaid only cover skilled nursing and rehabilitation for short periods of time, like immediately after surgery or while recovering from an injury. If you need assistance for an extended period of time, your health insurance probably won’t cover it, and you may have to pay out-of-pocket.

There are two main types of LTC insurance.

• Traditional LTC insurance: A traditional long-term care insurance policy only covers basic care. There’s usually a daily benefit of about $160 and a three-month waiting period before the benefits kick in. The cost of a traditional LTC insurance premium usually increases over time, with a rate hike every year as you get older.
• Hybrid LTC insurance: A hybrid LTC insurance policy includes the benefits of LTC insurance and some of the benefits of whole life insurance. A hybrid policy provides a death benefit to your heirs when you pass away, even if you never use the LTC benefits. The rates are locked in at the start of the policy, but hybrid policies tend to be more expensive than traditional policies.

Long-term care and medical bills data

The cost of medical care as we age can quickly accelerate. Long-term care coverage may be one way to prepare for these costs.

Your cost of medical care as you age will depend on a number of factors, including your health, location, and level of support from family and friends. If you are considering long-term care insurance, you may want to consider what it may cost you in premiums.

Long-term care insurance cost

The cost of long-term care insurance varies greatly, but traditional policies average out to about $2,220 annually for a 55-year-old man and $5,025 for a 55-year-old couple, according to the AALTCI. An annual hybrid policy, meanwhile, will set the same couple back $8,100 at 55 years old and a whopping $13,800 at 65 years old. However, remember that there’s a guaranteed payout for the hybrid policy, so the couple’s heirs would receive a return on that money.

As you can see, age plays a big role in determining your cost, and LTC insurance premiums typically increase dramatically the older you get. There are other factors as well that play into the cost, including gender, marital status, the amount of coverage and the company that underwrites your policy.

Shoppers concerned about the long-term affordability of LTC coverage may opt for hybrid policies. Shoppers who only want coverage for a set period of time, such as those who plan to live with a relative when they get older, may opt for a traditional policy.

What does long-term care insurance cover?

LTC insurance provides coverage for many types of care that people may need as they get older or develop a disability or medical condition that makes it difficult to care for themselves. Here are some of the things that a typical LTC insurance policy will pay for:

• Home health care (occupational therapy, physical therapy, etc.)
• Nursing homes
• Adult day care
• Rehabilitation care
• Help with ADLs
• Skilled and unskilled nursing

Best long-term care insurance

There are several reputable life insurance companies that sell LTC insurance. To help you find the best long-term care insurance company for you, our experienced editorial team evaluated some of the top carriers based on coverage options, availability and J.D. Power’s 2022 Individual Life Insurance Study scores. Here are some of the best long-term life insurance providers based on our assessment:

Mutual of Omaha

Why Mutual of Omaha made our list: Mutual of Omaha is the third-highest-rated life insurance company in J.D. Power’s 2022 study. Mutual of Omaha has been writing insurance policies for more than a century, and it is known for offering solid comprehensive coverage. We like the website’s “Determine Your LTC Insurance Need” calculator, which shows you how much common long-term care expenses, like a home nurse or nursing home, might cost based on your age and location.

Pros:

• Excellent customer satisfaction rating from J.D. Power
• Helpful online resources and calculators

Cons:

• Must work with an agent to get a quote
• Only one LTC insurance policy offering

Learn more: Mutual of Omaha insurance review

MassMutual

Why MassMutual made our list: MassMutual may be a great LTC insurance provider if you want multiple policies to choose from. Mass Mutual offers both traditional and hybrid LTC/whole life insurance policies. The company’s CareChoice hybrid policies provide LTC, a death benefit and a policy surrender value, as well as the potential to receive dividends each year. As an alternative, you could get a life insurance policy from MassMutual with acceleration benefits, which can be used to pay for certain long-term care expenses.

Pros:

• Multiple LTC insurance policy options
• Offers life insurance with LTC acceleration benefits

Cons:

• Must work with an agent to get a quote
• J.D. Power score is just above average

Learn more: MassMutual insurance review

New York Life

Why New York Life made our list: New York Life offers some of the best online tools and resources for long-term care insurance. You can use the cost calculator to estimate long-term care costs in your area and check out helpful articles in the “Learn & Compare” section. New York Life, founded in 1845, is a national insurer that offers life and LTC coverage across all 50 states and Washington, D.C. New York Life is also an AARP partner for LTC needs.

Pros:

• Many online resources and digital tools
• Traditional LTC and hybrid LTC policy available

Cons:

• Online quoting is not available
• J.D. Power score is just above average

Learn more: New York Life insurance review

Northwestern Mutual

Why Northwestern Mutual made our list: Northwestern Mutual is a highly-rated company that offers a broad range of insurance policies, including LTC options. It has an A++ financial strength rating from AM Best, which is the highest level given. The carrier also came in fourth in J.D. Power’s 2022 U.S. Life Insurance Study, which ranks overall customer satisfaction. You can purchase a traditional LTC plan, hybrid LTC plan or a life insurance policy with accelerated benefits for long term care from Northwestern Mutual.

Pros:

• Highest financial strength rating possible from AM Best
• Several LTC plans available

Cons:

• No online quotes available

Learn more: Northwestern Mutual insurance review

Who needs long-term care insurance?

Long-term care insurance may be beneficial, but it’s not necessarily the right option for everyone.

In general, people who couldn’t comfortably afford to pay out-of-pocket for long-term care may benefit the most from this type of insurance. Because private health insurance and Medicare only provide a limited amount of long-term care coverage, you would likely end up paying out-of-pocket if you went into a nursing home or needed a permanent home nurse, for example.

On the other hand, LTC insurance might not be worth it if you’re in a comfortable financial position and could pay out-of-pocket for your long-term care needs. Because some LTC insurance premiums get more expensive over time, you could end up saving money instead, creating a nest egg for your medical care as you age. Additionally, if you know you will be able to live with a friend or family member who can care for you as you age or if you injure yourself, LTC coverage may be less essential.

Frequently asked questions

• • What is the best age to buy long-term care insurance?

    The AALTCI recommends that you explore options for LTC coverage while you’re in your 50s or younger and in good health. However, the best time to buy long-term care insurance may depend on your personal circumstances and coverage needs. That said, buying coverage when you’re young and healthy may help you qualify for lower premiums.

  • How long do LTC benefits last?

    Most long-term care insurance policies provide coverage for up to five years. However, the exact length of time will depend on your insurance contract. An agent from your LTC insurance company can provide this information.

  • Do I need to have a physical exam for LTC insurance?

    In most cases, you’re required to take a physical medical exam before you can get LTC insurance. The insurance company uses the findings from the exam to determine your eligibility and calculate your premium. However, younger applicants may not be held to the same exam requirements as older individuals.

  • What are LTC Partnership Programs?

    These programs are collaborations between private insurers and each state’s Medicaid office. Participating in one of them protects some of your assets if you should need Medicaid in the future. There may be other benefits—your state’s Medicaid office will have more details.