3 Reasons to Buy Long-Term Care Insurance

Long-term care insurance gives you choices

Senior woman using long-term care benefits.
Long term care insurance can be very helpful if and when you need it. Photo: AE Pictures Inc.

Why buy long-term care insurance? Below are 3 good reasons.

1. You want the ability to access quality care quickly

If you need assistance and don’t have a long-term care insurance policy, what do you do? You get help from family and friends, pay for it out of pocket, or go on Medicaid.

To access long-term care benefits you must require help performing two out of the six activities of daily living. These are activities such as bathing, and dressing. As you age and start needing assistance with these items, many people rely on a spouse or other loved ones first.

If you don't have insurance and require care, you spend down your assets to pay for care once family and friends are no longer an option. If you need care for a long time and spend all your assets, at that point government assistance programs pick up the cost of your care in a qualified nursing facility.

You are likely to access care faster when you have long-term care insurance because you know you'll have the funds to pay for it. This is one of the reasons people buy this type of insurance—so they have the ability to access care faster and can use the insurance company’s money to pay for it.

2. You may have a long costly claim

Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance told the story of one of the longest claims on record: a woman who paid $12,000 in premiums over only a few years and got $1.2 million in long-term care benefits over the next 15 years. As Jesse said, “Is she lucky? No. I don’t think anyone would call her lucky.”

She had purchased long-term care insurance so her costs were covered, but I am sure she and her family both wish a long-term care need had never arisen in the first place. If you buy long-term care insurance, let's hope you never need it. If you do, though, you'll be glad you have it.

3. You want freedom of choice

When you buy long-term care insurance you will have the necessary resources to afford quality care, and you will have the ability to choose how and where you receive this care. Those without substantial resources of their own, or those who did not buy long-term care insurance, simply won't have as many choices. Does that mean everyone should run out and buy long-term care insurance? No, like any financial decision, you have to educate yourself, evaluate the pros and cons, and make a decision that is right for you.

Shopping for Long-Term Care Insurance

First, talk with a trusted financial adviser about whether or not long term care insurance makes sense for you. Coverage is complicated and sometimes expensive. Make sure your financial situation makes it a fit for you. For most people, the answer is yes.

Second, start shopping long before you would need coverage. You can't predict the future but if you wait until you're well into retirement and already have medical issues, you may be turned down or the premiums are too high to make it a smart or feasible option. If you're below the age of 50, your risk of being declined coverage is about 19% but that number rises to 46% if you're between 70 and 74.

As for cost, a single 55 year old person should expect to pay between $1,700 and $2,675 yearly for a policy. Cost vary widely based on the particulars of the policy.

If you purchase long-term care insurance starting in your 50s or 60s, understand that you've made a long-term commitment. You might pay premiums for 20 years before the policy begins paying for services. If you're lucky, the policy never pays out but you had peace of mind knowing that your assets weren't depleted because of medical challenges later in life.

There are alternatives to traditional long-term care insurance, such as getting care overseas, or buying into a Continuing Care Community. Despite the alternatives, those in retirement will find there is a great deal of peace-of-mind that comes from having traditional long-term care insurance.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Department of Health and Human Services. "Glossary."

  2. American Association for Long-Term Care Insurance. "Decline Rates for Long-Term Care Insurance Applicants (Individuals)."

  3. American Association for Long-Term Care Insurance. "Long-Term Care Insurance Policy Costs—2020."

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