What Is Long-Term Care Insurance?

Aug 9, 2022

One option for paying for long-term care (LTC) is to purchase an insurance policy that covers those costs. Typically, traditional health insurance policies and Medicare provide very limited coverage. As a result, unless you can qualify for Medicaid, you must buy LTC insurance or pay out of pocket if you need a nursing home or home care.

What Types of Long-Term Care Insurance Policies Exist?

You can buy a standalone long-term care insurance policy or a life insurance policy with an LTC rider that allows you to use all or part of the policy’s death benefit for long-term care while you’re alive. If you do not use it for long-term care, your beneficiary will get the death benefit.

Importantly, there are significant variations in policies between the same company and different companies. Policies may vary in what they cover when coverage is triggered, the benefit amount, waiting periods, and underwriting criteria. 

What Are the Risks and Benefits of Buying LTC Insurance?

As with all types of insurance, you may find that you are paying premiums for years and you never have a claim. However, if you do need LTC, your policy can keep you from using up all your savings. 

Cost is a factor. Long-term care insurance is expensive and premiums can rise significantly over the years. However, some of this has stabilized. When such policies first started to be offered, insurance companies found they were paying out more than expected. Some insurance companies went out of business; others raised rates substantially and instituted stricter requirements for obtaining a policy. 

It is recommended that you research insurance companies and find one that is highly rated and has a good track record with its policies.

At What Age Should You Buy Long-Term Care Insurance?

You must buy LTC insurance before you have a health condition that disqualifies you or substantially raises your premium. Often, that means getting insurance in your 50s or 60s, long before you are likely to need it. Your health and family history should be considered in determining the optimal age.

Should You Buy LTC Insurance?

It is best to talk with a long-term care insurance specialist who is knowledgeable about the companies and policies available and can assist you in evaluating your options.

You should also contact an experienced attorney. Our lawyers provide comprehensive Medicaid planning to help ensure clients protect themselves and their families in the event of death or disability.