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Long-term care insurance can let you enjoy your senior years without becoming bankrupt


According to the US Department of Health and Human Services, the average individual turning 65 in 2020 has a 70% likelihood of requiring long-term care or assistance in their later years. According to HCG Secure statistics for 2022, the average individual in need of home care will spend around $54,000 per year or $4,500 per month, while a person in need of a bed in a care facility would pay about $96,000 per year or $8,000 per month. With such high expenses, paying for long-term care can quickly deplete your resources and restrict your alternatives for better care. Long-term care insurance may play a crucial part in ensuring that you or a loved one spends the latter chapters of life in comfort, but you must understand the intricacies of this product before choosing if it is suitable for you.

Long-term care insurance is what it sounds like.


Long-term care insurance can help you cover the costs of receiving professional care for chronic health issues over a lengthy period. “What long-term care insurance does is it provides more day-to-day things,” Peggy Haslach, a certified financial planner with Finity Group, explains.

It is distinct from health insurance, including Medicare, which does not often cover these expenditures. While Medicaid may cover some of the costs, not all facilities accept Medicaid.


Long-term care insurance does not need you to relocate into a facility; it can also cover the expense of care at home, including training for family members and in-home support. Long-term care insurance may also cover home changes like ramps and shower knobs that make your living area more accessible and comfortable.

What is the purpose of long-term care insurance?


Long-term care insurance comes in when you’re having trouble living on your own. In general, insurance companies categorize this based on the six activities of daily living, or ADLs:





Transferring (from a bed to a chair)


When a person loses two of these six ADLs, their long-term care insurance benefits may be activated. Furthermore, some cognitive impairments linked with Alzheimer’s and dementia might immediately trigger your policy’s benefits (though this normally necessitates a doctor’s examination).

After the benefits are activated, you will still have to pay out of pocket for a period (known as the elimination period). The elimination time varies per policy but is often 30, 60, or 90 days. Following that period, your insurance will pay the remaining charges up to a daily maximum.

Many insurance, however, have lifetime limits for how long they will pay out – typically, two to four years of treatment, but limitless coverage are available. If your insurance has a limit and you go over it, you’ll have to delve into your funds to meet the charges. A high-yield savings account, such as UFB Premier Savings or Marcus by Goldman Sachs High Yield Online Savings, allows you to retain money set aside for long-term care in a secure, insured deposit account while still earning a respectable rate of return.
What factors influence the cost of long-term care insurance?

The cost of the policy is determined by several factors, including:

The age at which you purchase the policy

Your sexual orientation

The greatest daily payment it will make

The number of years that insurance will cover

The policy’s lifetime maximum amount

Any extra perks you include

It’s worth mentioning that women often pay more for insurance. According to Haslach, women live longer than males on average and typically retire with smaller assets.

How can one obtain long-term care insurance?

Long-term care insurance can be obtained in a variety of ways.

Long-term care insurance can be obtained by adding additional coverage, known as a rider, to your life insurance policy. These plans allow you to utilize a portion of your death benefit (the amount that would be paid to your family if you died) to pay for long-term care expenditures while you are still living. Long-term care riders are available to seniors up to the age of 79 with many of CNBC Select’s top recommendations for senior life insurance, including Mutual of Omaha. Guardian, another top selection, also provides long-term care insurance riders on some life insurance contracts.
Traditional long-term care insurance is also available, though it is becoming less common. These plans are not linked to life insurance or annuities and must be obtained independently.

Finally, hybrid long-term care plans are available, which include long-term care benefits on top of a life insurance policy or annuity.

Is long-term care insurance required?

To make an informed selection about any insurance policy, you must first understand your desires, requirements, and resources.

Before purchasing a long-term care policy (or adding a rider to your life insurance policy), determine how much coverage you require for care. Then evaluate where you have money that may be used for these needs in the future. Retirement funds, non-retirement savings and investments, annuities, life insurance, and your house are all potential sources of income to provide this sort of help.

Haslach also suggests consulting with an expert to determine whether long-term care insurance is appropriate for your case. “Find somebody who understands all of the options — annuities, life insurance, long-term care insurance, and your investments,” she advises.