Is Long-Term Care Insurance a Good Purchase? (2024)

FAQs

What is the biggest drawback of long-term care insurance? ›

The cost of care.

Most people who had been in a facility or had a loved one there in the last two years said that finding long-term care, and affording it, was difficult. Some families said that they were shocked by the high costs of nursing homes and aides when considering those options.

The Arguments Against Long Term Care Insurance

LTCI is relatively expensive for retired people on a fixed income. Some argue that if you have more than $1 Million Dollars in assets, you don't need it. If you have less than $500,000 in assets, you can't afford it. That argument may be true.

Your age doesn't just play a role in your access to long-term care insurance; it's also a factor in the premiums you pay. In general, you'll pay lower premiums if you enroll in a policy in your mid-50s than you would in your early to mid-60s.

So, 35% will use their coverage and 65% will not. As you might assume, the decline is because during those first 90 days, some people will recover and some will die.

In terms of the number of long-term care insurance policyholders, Genworth is the largest in the nation. In recent years, they sell few policies to new buyers. There is a lot of information available online regarding Genworth.

The bottom line. If you are under age 50, it may not always make sense to buy long-term care insurance. You can compare prices and see what you might pay when you are ready, but if you buy coverage too early, you may end up paying premiums for much longer than you need to.

Who Has Private Long-Term Care Insurance? Among adults age 65 and older, 12.4 percent (or 4.8 million adults) had coverage. Only 3.0 percent of African Americans age 55 and older and 2.4 percent of Hispanics were covered by private long-term care insurance.

Long-term care insurance typically doesn't cover care provided by family members. It also usually doesn't cover medical care costs⁠—those are typically covered by private health insurance and/or Medicare.

Who most needs long-term care insurance protection? ›

Long-term care services are a common necessity among retirees, yet only about 11% of adult Americans have long-term care insurance, according to KFF. Only 14% of those who are most likely to need this care — people ages 65 and older — actually have this type of coverage.

Seventy percent of Americans over the age of 65 likely will need long-term care, yet only 10% of them are carrying long-term care coverage, according to the results of a recent survey by the Arctos Foundation and HCG Secure.

Premiums for long-term care insurance are based on your age when you apply. Costs increase on your birthday. The annual rate increases are generally 2-4 percent in your 50s but start to be 6 to 8 percent per-year in your 60s.

The advantages of long-term planning include increased self-control and motivation, while the disadvantages include potential emotional distress and demotivation for those in poor goal standing.

Income and Assets: You may choose to buy a long-term care policy to protect assets you have accumulated. On the other hand, a long-term care policy is not a good choice if you have few assets or a limited income. Some experts recommend you spend no more than five percent of your income on a long-term care policy.

How Long Should My Benefit Period Be? A benefit period is the amount of time you'll receive payouts once they begin. For long-term disability insurance, Dave Ramsey suggests a benefit period of at least 5 years and up to age 65 if you can cover that financially.

Long-term care insurance typically doesn't cover care provided by family members. It also usually doesn't cover medical care costs⁠—those are typically covered by private health insurance and/or Medicare.