How much does long term care insurance cost?
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Table of Contents
Table of Contents
Insurance & Finance Analyst
Laura Adams is one of the nation’s leading finance, insurance, and small business authorities. As an award-winning author, spokesperson, and host of the top-rated Money Girl podcast since 2008, millions of readers and listeners benefit from her practical advice. Her mission is to empower consumers to live healthy and rich lives by planning for the future and making smart money decisions. She rec...
Laura D. Adams
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Daniel Walker
Updated June 2023
The cost of long term care insurance can be quite expensive, ranging anywhere from $500 to $8,000 per year depending on a variety of factors. Long term care can be very expensive and quickly dwindle away your lifelong savings as well as your assets if insurance is not purchased wisely.
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By purchasing an appropriate long term care insurance policy you can provide yourself with financial security in the event long term care is ever needed.
The Benefits of Long Term Care Insurance
People with certain disabilities or chronic illnesses are usually candidates for long term care. Long term care (LTC) means you are unable to care for yourself and therefore require assistance from a certified professional either in your own home, a nursing home, or an assisted living facility.
Persons requiring long term care can be of any age, although typically the patients are seniors over the age of 65.
The benefits of long term care insurance will depend on your specific policy. Policies can be written to provide benefits for a range of years, such as two years or five years, or even lifetime coverage. Benefit amounts range from $50 to $500 per day as the maximum payout amount for your care for that day, although most policies will let you flex the budgeted amount by the month.
For example, if your policy calls for a maximum benefit of $200 per day, you may be able to apply only $100 on one day and use $300 on a different day for when you may need extra care.
Another choice to consider for long term care insurance benefits is comprehensive coverage or facility only coverage. While coverage for facility care only will be cheaper in premiums, it will only provide benefits for facility care. Comprehensive coverage is more flexible and covers more services as well as more settings such as home care.
There are also numerous options you can add to your policy to extend your benefits. Some of these include handicap modifications for your home, medical equipment, monitoring systems, transportation, and even training for friends or relatives to help assist you with your care.
The Cost of Long Term Care Insurance
As with most medically related insurance policies, the cost of the insurance depends greatly on the age and oftentimes the health of the insured. Some policies offer inflation protection policies that can help keep your premiums low even when the cost of long term care increases. These policies usually have a higher premium in the beginning to help reduce the overall costs.
Since inflation protection can vary greatly from one policy to the next, it is important to pay special attention to what benefit you are receiving for it and at what cost. An annual premium for a 65-year-old can cost around $1800 for a policy with inflation protection, but $3,000 for the same benefits without the inflation protection.
If you plan to buy long term care insurance with comprehensive coverage that includes a benefit payout for all levels of care, then you may pay as much as $1,300 per year if you are between the ages of 40 and 49. The younger you are, the cheaper your premium will be, so some people choose to buy long term care insurance before they turn 50.
However, statistics show that most people do not need long term care until they are 65. If you wait to buy your policy until you’re almost 70, you can expect to pay as much as $4,000 per year for your premium. However, waiting until 70 to pay for the insurance is risky since you may require long term care prior to that.
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Buying Long Term Care Insurance
Buying long term care insurance is a big decision. As with all insurance, it needs to be purchased in advance of actually needing it, so you may pay premiums for years and never need the insurance or you may need it sooner than you ever imagined. Since it is cheaper to lock in a lower rate at a younger age, you may want to consider long term care insurance even when your senior years seem far away.
Review the insurance company thoroughly to make sure they are reputable and able to pay out your benefits. You may be paying premiums for 20 years before you ever need to start using your benefits so you want an insurance company that will still be there for you if the need ever arises.
Read the policy very carefully to understand exactly what is covered, what is excluded, and how your payouts will be handled. Every policy you encounter may be very different, so try to compare similar policies so you know who is offering a cheaper plan.
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Case Studies: Cost of Long Term Care Insurance
Case Study 1: Affordable Long Term Care Insurance for Younger Age
Lisa, who is 45 years old, decided to purchase long term care insurance with comprehensive coverage. She found a policy that suited her needs and paid an annual premium of $1,300. By buying the insurance at a younger age, Lisa was able to secure a more affordable premium.
Case Study 2: Inflation Protection and Premium Costs
John, who is 65 years old, opted for a long term care insurance policy with inflation protection. He paid an annual premium of $1,800 for the same level of benefits. Although the premium was higher initially, John wanted to ensure that his coverage would keep up with the rising cost of long term care.
Case Study 3: Higher Premiums for Delayed Purchase
Sarah, at the age of 70, decided to purchase long term care insurance. Since she waited until a later age, her annual premium was $4,000. Sarah recognized the risk of waiting too long to purchase the insurance, as she could require long term care prior to that.
Case Study 4: Choosing Facility Only Coverage
Michael wanted to minimize his premium costs, so he opted for long term care insurance with facility only coverage. His annual premium was lower compared to comprehensive coverage. However, he understood that this type of coverage would only provide benefits for facility care and not other services such as home care.
Case Study 5: Locking in a Lower Rate at a Younger Age
Emily, who is 35 years old, decided to purchase long term care insurance even though she believed her senior years were far away. She understood the advantage of locking in a lower rate at a younger age and wanted to secure affordable coverage for the future.
Frequently Asked Questions
How much does long-term care insurance typically cost?
The cost of long-term care insurance can vary depending on several factors, including the individual’s age, health condition, desired coverage amount, and the insurance company offering the policy. On average, the annual premium for long-term care insurance can range from a few hundred dollars to a few thousand dollars.
What factors affect the cost of long-term care insurance?
Several factors can influence the cost of long-term care insurance. These include the individual’s age at the time of purchasing the policy, their health condition, gender, marital status, desired coverage amount, the duration of coverage (e.g., number of years or unlimited), and any optional benefits or riders added to the policy. Generally, purchasing a policy at a younger age and in good health may result in lower premiums.
Are there any discounts available for long-term care insurance?
Some insurance companies offer discounts for long-term care insurance policies. These discounts may be based on factors such as the individual’s health, marital status (for couples), or the inclusion of specific features in the policy. It’s advisable to inquire with insurance providers about any available discounts that you may qualify for.
Can long-term care insurance premiums increase over time?
Yes, long-term care insurance premiums can increase over time. Insurance companies may periodically adjust premiums for various reasons, such as rising healthcare costs or changes in the overall risk profile of their policyholders. It’s important to carefully review the terms and conditions of the policy, including any provisions regarding premium increases, before purchasing long-term care insurance.
Are there any tax benefits associated with long-term care insurance?
Yes, in some cases, long-term care insurance premiums may be tax-deductible. The tax deductibility of long-term care insurance premiums depends on several factors, including the individual’s age and the total medical expenses incurred during the tax year. It’s recommended to consult with a tax professional or review the guidelines provided by the tax authority in your jurisdiction for more information on potential tax benefits.
Can the cost of long-term care insurance vary between insurance providers?
Yes, the cost of long-term care insurance can vary between insurance providers. Different insurance companies may have different pricing structures, underwriting guidelines, and policy features that can affect the cost. It’s advisable to obtain quotes from multiple insurance providers and compare the coverage and costs before making a decision.
Is it recommended to purchase long-term care insurance?
The decision to purchase long-term care insurance depends on individual circumstances, financial considerations, and personal preferences. Long-term care insurance can provide financial protection and help cover the costs associated with long-term care services. It’s important to carefully evaluate your needs, assess your financial situation, and consider the potential benefits and costs of long-term care insurance before making a decision. Consulting with a financial advisor or insurance professional can provide valuable guidance in this process.
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