|$3,000 in monthly benefits||$5,000 in monthly benefits||$7,000 in monthly benefits||$9,000 in monthly benefits|
Note: A three-year benefit multiplier means that your policy will pay out up to three times the monthly or daily benefit amount. Benefit multipliers can give an idea of how long your policy benefits will last.
Factors Influencing Cost
Gender (In Most States)
Since 2013, women have paid higher rates than men for long-term care insurance in states that don’t have legal requirements for unisex insurance. This is because women live longer than men, on average, and typically utilize long-term care benefits more often, accounting for the majority of benefit requests.
The older you get, the more long-term care insurance will cost. But if you buy when you’re too young, you’ll be paying premiums much longer, which may not be cost-effective. AARP recommends you buy long-term care insurance in your early to mid-60s, and couples buy at age 55. Individuals may pay more in monthly premiums than they would if they started in their late 40s or early 50s, but they’ll pay less in overall premiums through age 80. Nearly 70% of people turning 65 will need long-term care.
Health and Smoking Status
If you’re a smoker, your rates will likely be higher. If you’re in excellent health when you buy your policy, your rates should be lower. You might pay more for having certain health conditions, or you may be declined coverage altogether because of those conditions. The chance of this happening increases with age, so, if you’re worried about needing long-term care in your 60s, you may want to buy insurance when you’re in your 50s and in good health.
Maximum Daily or Monthly Benefit Amount
Long-term care insurance policies come with a maximum amount that the insurer will pay for care, typically expressed on a per day or per month basis. Increasing the limits of your coverage will also likely increase your premiums.
Maximum Benefit Period
The maximum benefit period may be capped after a certain number of years or based on a maximum dollar amount that could last for any number of years. In some states, like California, insurers are required to use a pool-of-money method which multiplies your daily or monthly benefit by a certain number of years to determine your net benefit. For example, if your policy pays $5,000 per month and has a three-year multiplier, your maximum benefit would be $180,000. If you used the entire benefit every month, your benefits would last for three years. But if you use less than the total monthly benefit, your policy could last longer than three years.
When choosing a benefit period, bear in mind that 43% of claims are for a year or less, while 15% are for five years or more.
Most policies also come with an elimination period, which is the amount of time you must pay for care before your policy benefits kicks in. Choosing a longer elimination period, such as 90 days, can help reduce your premiums. Just make sure you have enough savings to cover the cost of care in the meantime.
Many long-term care insurance companies offer riders, such as inflation protection or a waiver of premium that keeps you from having to make payments once you’re receiving long-term care. In most cases, adding these benefits will increase your premium.
Top Long-Term Care Insurance Companies
The best long-term care insurance for you will depend on the individual factors affecting your rate and your coverage needs. Here are some top long-term care insurance companies you may consider.
- New York Life: New York Life offers both traditional long-term care insurance and a combination policy with life insurance. Policies can be customized to include the type of care you want, including in-home care. You’ll need to speak with an agent for details. AARP offers long-term care insurance through New York Life, too. New York Life has an A++ (Superior) financial strength rating with AM Best.
- Mutual of Omaha: Mutual of Omaha offers a traditional reimbursement policy that pays for your actual care costs based on receipts (after the elimination period), or you can opt for a cash benefit that pays you a set dollar amount each month. Mutual of Omaha also offers online cost estimates. The company has an A+ (Superior) financial strength rating with AM Best.
- Lincoln Financial: Lincoln Financial only offers long-term care benefits through its hybrid universal life insurance policies. There’s no elimination period, and the company uses streamlined underwriting, so you won’t need a medical exam. Lincoln Financial has an A (Excellent) financial strength rating from AM Best.
- Brighthouse Financial: Brighthouse offers a hybrid life insurance product that provides a guaranteed death benefit and monthly cash benefit should you require long-term care (the latter reduces your death benefit). Unlike a reimbursement policy, you won’t have to submit receipts to get the benefit. You can elect to link your account to an index or indices to grow your benefits through investment, too. Brighthouse Financial has an A (Excellent) financial strength rating from AM Best.
- Nationwide: Nationwide offers a linked-benefit long-term care policy that pays 100% of the monthly benefit to eligible policyholders plus a minimum 20% death benefit to beneficiaries even if you’ve exhausted all money earmarked for long-term care. Benefits are flexible and can be used to pay an informal caregiver, as long as a licensed health care practitioner approves informal care. Nationwide has an A+ (Superior) financial strength rating with AM Best.
Your policy comes with a free-look period that gives you a certain number of days to review your policy and cancel without losing money. In Florida, for example, you have a 30-day free look period.
How to Save Money on Long-Term Care Insurance Premiums
- Choose a standalone policy: Many companies offer a hybrid product that includes life insurance and long-term care insurance. The benefit is that if you don’t need long-term care, your premiums will still provide a payout for your beneficiaries. However, these policies typically have higher premiums. You can lower your premiums by getting a standalone policy.
- Choose a reimbursement policy: An indemnity or cash-benefit policy doesn’t require you to submit receipts—you can use your monthly benefits as you see fit. But these policies cost more and may come with tax consequences. To save money, opt for a reimbursement policy.
- Choose a longer elimination period: The elimination period of long-term care insurance impacts your premiums. A policy with a 90-day waiting period will generally cost less than a policy with a 30-day elimination period. Just make sure you have the savings to afford the cost of care while you’re waiting for benefits to kick in.
- Opt for lower coverage limits: You could choose to buy less coverage than you think you’ll need, and cover the remaining costs out of your savings. This will lower your monthly premiums.
- Compare quotes: Depending on individual factors, some companies may offer you lower premiums for the same coverage than others. That’s why it’s a good idea to collect a handful of quotes and compare your options. Just remember to compare third-party ratings from companies like AM Best and J.D. Power when evaluating companies as well.
- Buy with your partner: You’ll typically save money if you buy a joint policy with your spouse.
- Purchase in your 50s: Rates begin increasing between 6% and 8% annually in your 60s. If you buy in your 50s, your premium will be lower than if you buy later. You’re also less likely to be denied coverage for health reasons, and you’ll be able to take advantage of the policy should you need care earlier on.
Knowing when to purchase coverage can be tricky. Buying sooner means a lower premium payment, but could increase your total premiums over time. Use your best judgment. And if you have a history of family health problems likely to require long-term care (like dementia), getting a policy sooner rather than later is probably wise.
How to Choose the Best Long-Term Care Insurance
Decide If You Want a Hybrid or Standalone Policy
Hybrid life insurance policies with long-term care benefits give you more flexibility. If you pass away without needing long-term care, your beneficiaries will receive a benefit. Another perk of a hybrid policy is that premiums are locked in, which may not be the case with a standalone policy. However, hybrid policies are more expensive than standalone long-term care insurance.
Determine How Much Coverage You Need
The national median cost for a private room in a nursing facility tops $9,000 per month, but your long-term care costs will depend on where you live and the type of care you’re looking for. Many insurance companies offer a calculator that approximates costs in your area. When deciding how much coverage to buy, factor in any money you’ll receive from Social Security and your pension as well.
Compare Coverage Types and Features
If you don’t want your family members to deal with submitting receipts for reimbursement, consider a more costly indemnity policy, which means benefits are paid directly to you and receipts may not be required. You’ll also want to compare features like inflation protection and waiver of premium riders.
Compare Company Ratings
Look at financial strength ratings, customer service reviews, and National Association of Insurance Commissioners (NAIC) complaint indices for the companies you’re considering.
Avoid choosing a company with an AM Best rating below A- (Excellent) or a higher-than-expected NAIC complaint index (above 1.00).
Try to collect quotes for the same coverage parameters so you have a fair comparison. Pay attention to whether premiums are guaranteed for a certain number of years or if they might increase. You may also request to review the company’s rate history.
What Is Long-Term Care Insurance?
Long-term care insurance reimburses care costs or provides a fixed cash benefit when a policyholder is deemed chronically ill by a healthcare provider. Long-term care insurance can cover the cost of long-term care in your home or a facility. Each policy sets limits on how the money can be used, how long the policy will pay the benefits, and the maximum amount the policy will pay.
Is Long-Term Care Insurance Worth It?
In many cases, yes. More than 66% of 65-year-olds will require long-term care, according to the Administration for Community Living. Paying for long-term care insurance allows you to cover your long-term care needs for pennies on the dollar, rather than depleting your life savings should you become chronically ill.
What Disqualifies You From Long-Term Care Insurance?
You generally won’t be eligible for long-term care insurance if you’re currently receiving long-term care or need assistance with any activities of daily living (ADLs), which are six specific daily activities like eating and getting in and out of chairs. If you use a walker, wheelchair, multi-pronged cane, crutches, or oxygen, or if you have a condition such as Alzheimer’s or Parkinson’s, you likely won’t be eligible.
What Does Long-Term Care Insurance Cover?
Most long-term care insurance policies provide benefits for care received in various settings, such as a nursing home, assisted living facility, or your own home. To start receiving benefits, a healthcare provider will typically need to certify that you either need assistance with two out of six ADLs or need supervision due to cognitive impairment. Some policies only reimburse the actual cost of care, while others provide a fixed monthly benefit.