Benefits and costs of long-term care insurance
Quick insights
- Long-term care insurance typically covers costs for professional assistance with daily living tasks, either at home or in a facility.
- Government programs don’t tend to cover many long-term care needs.
- The cost for long-term care insurance usually depends on your age and health status, the level of coverage and several other factors.
When planning for retirement, you might focus on saving for everyday expenses or making sure you have adequate healthcare coverage. But what about long-term care needs? Many people require some form of long-term care as they age, ranging from home health aides to assisted living facilities or nursing homes.
Costs vary, but the annual expense of a nursing homeOpens overlay, for example, could exceed $100,000 in many locations. Long-term care insurance can help cover some of these costs and could help prevent you from spending savings you intended for other purposes.
In this article, we’ll explore some benefits of including long-term care insurance in your financial planning, along with its associated costs.
Benefits of long-term care insurance
Do you really need long-term care insurance? You might assume that government programs like Medicare and Medicaid will assist with long-term care. While these programs may cover some long-term care needs under specific conditions, Medicare is not intended as a long-term care financing solution, and Medicaid has federal and state income requirements for eligibility. Contact these agencies for specific coverage details.
Long-term care insurance can help fill in coverage gaps left by government programs and help you stick to your retirement budget. Here are some additional benefits of purchasing a long-term care insurance policy:
- Helps to protect your savings and assets from being depleted by the costs of long-term care.
- Can reduce the caretaking burden on family and friends, which can take a physical, emotional and financial toll.
- Generally provides more options when choosing where and how you receive care compared to government programs.
How much does long-term care insurance cost?
The cost of long-term care insurance can vary based on a range of factors, from the age at which you purchase the policy to your location.
Below, we’ve outlined some average annual premiums for a new policy with $165,000 in coverage according to the 2025 American Association for Long-Term Care Insurance (AALTCI) annual Price Index surveyOpens overlay:
- 55-year-old single male: $950
- 55-year-old single female: $1,500
- 55-year-old married couple: $2,080
Note that these average premium costs are for policies that don’t include inflation protection. This protection is a rider that helps the coverage keep pace with inflation. Without this rider, it’s possible the coverage won’t be sufficient if healthcare costs increase.
While it may be helpful to know the average cost of these policies, keep in mind that many factors influence premium costs.
Factors affecting long-term care insurance costs
Premium costs for long-term care insurance are sometimes cost-prohibitive, but you may be able to find a plan that balances your anticipated long-term care needs with the cost.
As you review your options, it may be helpful to understand some of the factors that influence long-term care insurance premiums:
- Age at which you enroll: As a general rule of thumb, the older you are, the higher your premium will be.
- Health status: Existing health conditions can lead to higher premiums and may result in exclusions and waiting periods being applied to your policy.
- Level of coverage: Policies offering more comprehensive benefits typically command higher premiums.
- Policy duration: Opting for longer coverage periods usually results in higher premiums, as the insurer is at risk for a longer period of time.
- Insurance company: Premium costs can vary across companies, even for similar policies.
- Inflation protection: If healthcare costs continue to rise, the initial level of coverage might become inadequate over time. An inflation protection rider can preserve the value of your coverage, although it often increases the premium.
- Geographic location: Premiums can vary by state due to differences in healthcare costs and insurance regulations, affecting competitiveness and pricing.
- Gender and marital status: For companies that use gender-based pricing, women often pay higher premiums due to their longer average life expectancy. Married couples might receive discounts if they bundle coverage.
Fitting long-term care insurance into your financial plan
As you prepare for your potential future healthcare needs, it may be worthwhile to include this insurance in your long-term financial planning.
It’s generally recommended to purchase long-term care insurance around the age of 55. Premiums tend to be more affordable at that age, though the cost depends on many factors. Purchasing a policy before you’re 55 years old could mean you pay premiums for years before the coverage is likely to be needed.
As you assess your likely long-term care needs and your financial situation, there are several professionals you can consult with:
- Geriatric care managers: Usually provide insights into the type of long-term care you might need, which could inform your decision regarding the amount and type of coverage.
- Financial planners: May help you assess how long-term care insurance fits into your financial plan.
- Insurance specialists: Can typically help you assess your needs, determine the right level of coverage and compare policies.
Periodically reviewing your long-term care insurance policy and overall financial plan may help you keep your coverage aligned with your needs and goals. Note that you’ll need to pay the premiums for the rest of your life to keep the coverage.
In summary
Long-term care can be provided at home through a home health aide or in an assisted living facility or nursing home. While government programs may cover some long-term care needs in limited circumstances, purchasing long-term care insurance can help protect your savings and assets and typically covers a wider range of care options.
The AALTCI publishes average premium costs annually, which can give you a general idea of the long-term care insurance costs. However, your premium may depend on factors such as your age, health status, location, gender and marital status, as well as the coverage amount and length. Adding an inflation rider is generally recommended to help your coverage keep pace with rising healthcare costs, though it often results in higher premium.
Financial planners, insurance specialists and geriatric care managers can provide guidance when selecting long-term care insurance.
