Is Long-Term Care Insurance Worth It?

Is Long-Term Insurance worth it?

Thinking about retirement and planning for your future should be exciting. Most people are looking forward to finally having the opportunity to travel, spend time with loved ones, and pursuing new interests and hobbies. Saving, careful planning, and staying healthy are often top priorities for those headed into retirement. You want to enjoy what you’ve worked so hard to accomplish!

If you’ve ever worked with a financial planner or advisor, you understand just how many areas of your life are affected by your financial standing. One major aspect of financial planning is health coverage. Yes, planning for Medicare costs is part of the equation, but what if something unexpected happens?

It can be difficult to imagine needing help to accomplish everyday tasks or routines if you or a loved one develops a chronic medical condition, disease, or disorder that requires daily care.

That’s what long-term care insurance is for.

What is Long-Term Care Insurance?

While Medicare or your private health insurance will cover things like hospital procedures, screenings, and doctor visits, those policies don’t cover assistance with daily tasks at a nursing facility, assisted living facility, or even your home. Long-term care insurance is coverage specifically for assistance with daily tasks like bathing, dressing, eating, or getting in and out of bed.

Long-term care insurance is an insurance policy that pays for care in a nursing home or assisted living center, nursing care or health services at your home, therapeutic care, and some policies cover hospice care or even caregiver training for a family member.

Long-term care insurance cannot be used for a preexisting condition and some mental or nervous disorders.

It’s important to consider how much flexibility or choice you want in terms of long-term care, should you need it. Many states are implementing a LTC tax strategy in which state-sponsored care will become the norm, leaving individuals without much of a say for where and how they receive treatment.

Who Should Consider Long-Term Care Insurance?

No one anticipates a stay in a nursing home, but the data suggests that more of us will need it than not.

Without a long-term care policy, things can get pricey. Long-term care cost between $35,000 and $108,000 a year in 2021. Many seniors want to stay in their homes as long as possible, but home health care is expensive, too at an average of $5,625 a month.

Long-term care insurance should be a part of your financial planning process, especially if you have assets or wealth you want to protect. Consider your life expectancy, your family situation, and your genetics/health history when considering if a long-term care policy is right for you.

For those who need long-term care, there are only a few options. You can:

  1. Pay for everything yourself
  2. A family member can care for you
  3. You can buy long-term care insurance

What about Medicaid? Medicaid may pay for long-term care, but this option typically only works if you’ve spent all your assets. Long-term care insurance protects your assets so you don’t spend your entire savings on healthcare.

Premiums vary, depending on what kind of long-term care insurance policy you purchase.

Premium also depends on these factors:

  • Age (the younger you are, the lower your rates will be)
  • Your Health (medical underwriting is a part of the long-term care insurance process)
  • Where You Live
  • How Long you Wait to Get Benefits if you have a Claim (policies with longer waiting periods have lower rates)
  • Benefit Amounts and Duration (Some policies are only for one year, while others are longer with higher payouts)

There are many different long-term-care policy types, which is why it is important for financial advisors to work with an insurance broker who can shop the market for each client’s specific needs. Each insurance carrier has its own medical underwriting process, guidelines, and rates. It’s important to carefully compare different policies and get the options you want for care.

In 2021, long-term care cost between $35,000 and $108,000 with home health care averaging $5,625 monthly.

How Does LTC Insurance Work?

Ultimately, long-term care insurance protects your assets and puts the choice into your hands about how you receive care or treatment, and where.

Long-term-care insurance requires planning ahead. If you wait until you need a facility and then want to apply, it’s too late. Keep in mind that insurance companies do not accept every applicant. You must be reasonably healthy and pass the medical underwriting process in order to qualify.

How does it work? Your insurance company will pay benefits when you’re unable to perform activities of daily living (ADLs) or you have a cognitive impairment.

Most policies involve a waiting period, which is about 30-180 days between the time you start receiving a service and the time your policy begins to pay. During this time period you will pay out of pocket.

Each policy will have a benefit period, which is the length of time a policy will pay benefits. Some policies are one year, and others extend to a lifetime.

While these are the basic features of long-term-care, there are lots of other factors to consider when shopping. Rates, inflation protection, waiving premium if you’re receiving benefits, and whether the policy is tax-qualified or not are all other things to consider with your financial professional.

Get Connected with Advanced Benefit Solutions

Advisors, do you have a trusted partner who can find the right long-term care solutions for your clients? Let our knowledgeable team help.

Call us today at (800) 291-2009 or send us an email at to get started