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What Is Long Term Care Insurance?

No one wants to imagine having around the clock care as they age, but this is unfortunately a reality for millions of people. This care is expensive, and it could put a tremendous strain on a family. However, long term care insurance can help absorb this burden. So, what is long term care insurance?

Simply put, long term care insurance is an insurance product that one purchases that provides financial assistance if the insured ever needed long term care assistance. If the need was ever there, and the individual carried long term care insurance (LTC), the family could save quite a bit of money! 

How Does Long Term Care Insurance Work?

Similar to auto insurance, you’d pay for long term care insurance each month with the hopes of never needing it. However, in the event you, or the insured, ever needed LTC assistance, the insurance would kick in and assist with the expenses.

Also, LTC insurance is private insurance, unlike Medicaid. Let’s cover some of the most commonly asked questions when it comes to LTC insurance:

What Does Long Term Care Cover?

One of the most common questions is – what does long term care insurance cover? LTC insurance helps cover the cost of:

  • Nursing home care 
  • Home health care 
  • Adult daycare 

Long term care insurance helps cover the expenses a public assistant program does not. In addition to covering more expenses, LTC insurance also provides the insured with more flexibility and choice – which is important! 

When Is the Best Age to Buy Long Term Care Insurance?

When should you buy long term care insurance is another commonly asked question. LTC insurance is a part of retirement planning.

Like any part of retirement planning, the sooner you get started on it, the better. Financial advisors generally recommend considering long term care insurance between the age of 40 and 50 years old.

To help reduce the LTC insurance cost, purchase this insurance while you’re young! 

Who Should Not Buy Long Term Care Insurance?

Long term care insurance comes at an additional expense, and it’s not the number one priority. The reality is, if you never needed to use the long term care insurance benefits – and everyone hopes they never have to use them – the policyholder is out of pocket for all the premiums they paid.

Other insurance products, or financial investments, should take priority over LTC insurance. 

How Long Does Long Term Care Insurance Last?

A long term care insurance policy cannot be canceled or terminated. Coverage is in effect as long as the policyholder is current on all payments.

The rate may change year over year, but the policy itself is a guaranteed renewable insurance product. 

When Should You Buy Long Term Care Insurance?

The younger you purchase long term care insurance, the better. Generally, you are healthier in your younger years, and the premiums will be less per month.

These savings could be incredibly helpful when you retire and you’re on a fixed income. 

Example of Long Term Care Insurance

An example of long term care insurance would be if John Smith suffered from severe dementia. There is only so much a family can do, and many times professional and skilled nursing or medical care is required.

If John Smith needed around the clock coverage to assist him with living, he may need to live in a nursing home. Nursing home care is expensive, but if John Smith had long term care insurance, the insurance company would provide a fixed dollar amount to help cover the cost of the nursing home. 

How to Get Long Term Care Insurance

There are plenty of long term care insurance companies out there to choose from. Selecting the right one can help save you money, or expand your coverage.

Pick the Right Provider for Your Needs

Not all long term care insurance companies are created equal. Some long term care insurance companies offer superior long term care insurance, whereas others offer a more expensive long term care option.

Be sure to shop around and see a few different plans from a few different long term care insurance companies. Collect all the information and see which one is the best option for you and your goals/needs. 

Application and Health Survey

There is an application and health survey that is part of every long term care insurance application. The long term care insurance companies will ask a series of questions. Common questions include:

  • Your medical history, and family’s medical history.
  • Which, if any, medications you take on a regular basis. 
  • Your current living arrangements and marital status. 
  • The name and address of the various doctors you see. 

Pick Coverage

Selecting the right amount of coverage is key. If your goal is to reduce any financial burden, you don’t want to select a plan that will not provide adequate coverage. 

Monthly Premiums

The monthly premium is what you need to pay each month to keep, or carry, your long term care insurance coverage. A premium is not a cookie-cutter expense.

The premium is dynamic per each individual based on the health application, lifestyle, and marital status. 


Deductibles are how much one must pay out of pocket before insurance kicks in and covers the expense. Considering the cost of long term care, it’s typically never a problem reaching the deductible. 

Make a Claim

There will be paperwork involved in making a long term care insurance claim. Such paperwork includes documentation from your doctor, a nursing plan of care, and proof of expenses.

A family member, or friend, can make these claims on your behalf if you are unable to. 

Long Term Care Insurance Cost

How much does long term care insurance cost? That’s contingent on a few key factors. Such factors include: 

Age and Health 

Similar to life insurance, the older you get, the more expensive this insurance becomes. This is why it’s in one’s best interest to purchase this insurance in their younger years, as youth and health is on their side. 


A woman’s life expectancy is longer than a mans. Therefore, women typically pay a higher amount for insurance.

The more years you’re alive for, the higher chance of needing to use long term care insurance. 

Marital Status 

If you are married, you can expect to have a reduced principal. The reasoning is quite simple – insurance companies believe one’s spouse will be inclined or able to take care of their husband/wife, which would reduce the need to exercise the long term care insurance benefit. 

Insurance Provider

Again, similar to all insurance products (auto, life, home, etc), the rate will vary by insurance company even if the same coverage is being issued. Be sure to shop around with numerous long term care insurance companies to compare rates. 

Level of Coverage

The more coverage you elect, the more you’ll pay. This is true for any insurance policy as this increases the risk for the long term care insurance companies. 

Is Long Term Care Insurance a Good Investment?

Understanding if long term care insurance is a good investment or not comes down to numerous factors. One’s net worth, liquidity, and life conditions all need to be taken into consideration.

Additionally, one’s health and family history needs to be considered. If you have plenty of money, and could easily absorb the cost of LTC if needed, it’s probably best to avoid paying for long term care insurance.

But if LTC would put a tremendous financial burden on you or your family, it is certainly worth considering. 

Tax Advantages for Long Term Care 

Under the current tax law, there are tax advantages to long term care insurance. As long as you itemize your deductions, you could deduct your LTC insurance premium as a medical expense under federal law.

Some states also will honor this deduction. Note, all the premiums may not be eligible for a deduction, and tax law can change. 

Long Term Care vs Life Insurance

Life insurance is designed to provide a death benefit to your loved ones, or beneficiaries, when you pass away. Long term care insurance is designed to prolong your life, and the quality of your life, if you ever needed long term medical care – without putting a tremendous financial burden on your loved ones. 

Is It Worth Getting Long Term Care Insurance?

There is so much that goes into long term and retirement planning. The reality is, no one can predict the future or truly understand what their future needs will be.

Depending on your circumstances, a LTC insurance option may be a great product to carry. Working with a financial advisor is also a great way to ensure you are prepared for the future.

Although financial advisors do not have a crystal ball, they are well educated on risk to reward ratios, and will help factor in all the variables and considerations that are needed to create a bulletproof plan.