Aug 23, 2023

How much does long-term care insurance cost?

Manny Cominsky

Long-term care insurance plays a crucial role in protecting older adults from the high costs associated with long-term care services. As individuals age, there is an increased likelihood of needing assistance with daily activities and medical care. Long-term care insurance provides financial coverage for services like nursing home care, assisted living facilities, and in-home care. In this comprehensive guide, we will explore the cost of long-term care insurance, the services it covers, and why it is essential for individuals to consider this type of coverage.

The Importance of Long-Term Care Insurance

As people age, the need for long-term care becomes more prevalent. According to statistics from the Department of Health and Human Services, around 70% of individuals over the age of 65 will require long-term care services at some point in their lives. This can include assistance with activities of daily living (ADLs) such as bathing, dressing, and eating. Long-term care insurance provides coverage for these services, ensuring that individuals have the financial means to receive the care they need without depleting their savings.

Without long-term care insurance, the cost of care can be astronomical. In 2023, the average monthly cost of nursing home care in the United States is roughly $8,000. Other services, such as homemaker services, home health aides, and assisted living facilities, also come with significant expenses. These costs can quickly deplete an individual's savings and lead to financial hardship.

What Does Long-Term Care Insurance Cover?

Long-term care insurance covers a wide range of services aimed at assisting individuals with their daily living needs. These services can include both medical and non-medical care. Medical services often involve assistance with activities of daily living (ADLs) such as bathing, dressing, using the toilet, transferring, incontinence care, and eating. Non-medical services, known as instrumental activities of daily living (IADLs), encompass tasks like housekeeping, medication management, grocery shopping, and pet care.

It's important to note that long-term care insurance policies can vary in their coverage, so individuals should carefully review their policy to understand exactly what services are included. Some policies may also cover care related to specific chronic medical conditions such as Alzheimer's disease and other cognitive disorders.

How Much Does Long-Term Care Insurance Cost?

The cost of long-term care insurance can vary based on several factors, including age, gender, location, health condition, and the specific plan and carrier chosen. On average, a single 55-year-old male can expect to pay around $950 per year for a policy with a benefit amount of $165,000. A single 55-year-old female, on the other hand, may pay approximately $1,500 annually for the same level of coverage. These premiums generally increase with age, so it is advisable to consider purchasing long-term care insurance in your mid-50s to lock in lower rates.

It is worth noting that long-term care insurance premiums may also increase on an annual basis. These increases are typically based on the policyholder's age and may vary from 2% to 8%. Additionally, the specific terms and conditions of the policy, such as the length of coverage and maximum benefit amount, can impact the cost of premiums.

Factors Influencing the Cost of Long-Term Care Insurance

Several key factors influence the cost of long-term care insurance. Understanding these factors can help individuals make informed decisions when selecting a policy. Here are some of the main factors that can impact the cost:

Age: The age at which you purchase long-term care insurance plays a significant role in determining the cost of premiums. Generally, the younger you are when you purchase a policy, the lower your premiums will be.

Gender: Gender can also affect long-term care insurance premiums. Women tend to have higher premiums compared to men due to their longer life expectancy and higher likelihood of requiring long-term care services.

Health Condition: Your current health condition can impact the cost of long-term care insurance. Insurance providers may assess your health through medical underwriting, and individuals with pre-existing conditions or poor health may face higher premiums or even potential coverage denials.

Policy Coverage and Benefit Amount: The specific terms and coverage options selected for the policy can influence the cost of premiums. Policies with higher benefit amounts or additional features such as inflation protection or a longer coverage period may have higher premiums.

Location: The cost of long-term care services can vary depending on where you reside. Insurance providers consider regional differences in their pricing, so individuals in areas with higher costs of living may face higher premiums.

It is essential to compare quotes from multiple insurance carriers to find the best coverage and rates that align with your individual needs and budget.

Other Options for Paying for Long-Term Care

While long-term care insurance is a popular and effective option for covering the costs of long-term care, it is not the only solution available. Individuals can explore alternative methods of funding their long-term care needs. Here are a few options to consider:

Self-Funding: Some individuals may choose to self-fund their long-term care by relying on personal savings, investments, or retirement funds. However, this approach carries the risk of depleting financial resources and potentially leaving individuals without sufficient funds for other needs.

Life Insurance with Long-Term Care Riders: Some life insurance policies offer long-term care riders that allow policyholders to access a portion of their death benefit to cover long-term care expenses. This option provides flexibility, as it combines life insurance protection with long-term care coverage.

Health Savings Accounts (HSAs): Individuals with high-deductible health insurance plans can contribute to HSAs, which allow for tax-free savings to pay for qualified medical expenses, including long-term care costs. HSAs offer potential tax advantages and can serve as a dedicated fund for future healthcare needs.

Annuities: Certain types of annuities, such as deferred annuities with long-term care provisions, can provide income streams that can be used to cover long-term care expenses. These annuities offer a combination of investment growth potential and protection against long-term care costs.

Reverse Mortgages: Older adults who own their homes may consider a reverse mortgage, which allows them to convert their home equity into cash. The funds obtained from a reverse mortgage can be used to pay for long-term care services.

Each of these options should be carefully evaluated based on individual circumstances and financial goals. Consulting with a financial advisor can provide valuable guidance in determining the most suitable approach for funding long-term care needs.

Long-term care insurance is a valuable tool for individuals to protect themselves from the high costs associated with long-term care services. As the likelihood of needing long-term care increases with age, it is crucial to consider the financial implications and plan accordingly. Understanding the factors that influence the cost of long-term care insurance, the services it covers, and the available alternatives can help individuals make informed decisions about their long-term care needs. By investing in long-term care insurance, individuals can have peace of mind knowing that they are prepared for potential future care needs without jeopardizing their financial security.

To learn more about how Sunbound can help make senior care more affordable for you or your loved one, send us an email at or request more information on Sunbound. Sunbound is the best way to pay for senior living and senior care and is on a mission to make senior living affordable for everyone.

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