Long-Term Care Insurance: What You Need To Know (2025)

There are two ways to purchase long-term care insurance, according to Georgia-based insurance broker Robyn Pate. An individual can either purchase an independent long-term care insurance policy from their preferred insurance provider, or they can purchase long-term care coverage as part of a life insurance plan.

Both plans require premium payments so long as the policy is active, and the policyholder submits a claim whenever they need to use the coverage. And in both types of plans, the policyholder chooses the amount of coverage they want, which often affects the cost of the plan’s premium. Most policies cap the amount they would pay out in benefits per day should the policyholder need to use those benefits. They also cap how much the policy can pay out in benefits during the policyholder’s lifetime.

Regardless of the type of plan a person chooses, a health care provider must prescribe long-term care assistance in order for a long-term care insurance policy to cover its portion of the costs, says Pate. If the individual has a standalone policy, it’s more likely that the insurance provider will pay a home care agency or skilled nursing facility directly on their behalf. There are some standalone policies that will pay the individual directly.

With most policies, the policyholder is required to pay for the long-term care services they need through what’s called the “elimination period,” which usually lasts 30, 60 or 90 days. After this period, the insurer providing the long-term care policy starts reimbursing them up to the maximum daily amount provided by their coverage until they reach the full lifespan of the policy.

A long-term care policy helps cover the costs of a person’s care when they need help navigating ADLs due to a chronic medical condition, disability or disorder. To receive long-term care benefits under most policies, an older adult must require help within at least two ADL areas: bathing, eating, dressing, navigating the bathroom and getting in and out of a bed or chair. A health care provider must also predict that they will require this level of help for more than 60 days.

If the long-term care plan is a part of a life insurance policy, the plan will typically pay 2% of the death benefit toward the monthly cost of long-term care for three to five years, according to Pate. For example, if someone purchased a $100,000 life insurance policy, they would receive up to $2,000 per month for three to five years for use toward the cost of their care. The amount could be applied to care provided in a skilled nursing facility, an assisted living community or their own home. The policyholder could also elect to use the money as they wish, opening the possibility of paying a family member to provide care.

While $2,000 may sound generous, extended long-term care can be expensive. Nationally, skilled nursing facilities charge over $90,000 per year for a shared room, the median cost of assisted living is around $54,000 per year, and the median cost of a full-time home health aide hired through a home health care agency exceeds $61,000 per year.

Some long-term care insurance providers deny coverage to those with preexisting chronic illnesses and conditions. However, these people shouldn’t be deterred from seeking out long-term care insurance, says Pate, adding that they’ll likely pay more for a plan, but the coverage would still be beneficial should they need long-term care services in the future.

Long-term care insurance has gained popularity since its introduction in the 1980s, due to the likelihood of needing higher levels of care at some point in one’s later years and the rising costs of care. The U.S. Department of Health and Human Services states that, on average, women tend to need care longer (3.7 years) than men (2.2 years), with a combined average of three years. While 30% of older adults won’t require any long-term care at all, it’s estimated that 20% will have care needs that extend beyond five years.

With that said, long-term care policies aren’t as widely used as one might expect. As of 2020, roughly 7.5 million U.S. adults have long-term care insurance, according to the American Association for Long-Term Care Insurance^[2]7.5 Million Americans Have Long-Term Care Insurance Protection. American Association for Long-Term Care Insurance. Accessed 8/18/2022. . More specifically, only 7% of U.S. adults over the age of 50 have a long-term care insurance policy^[3]Designing Universal Family Care. National Academy of Social Insurance. Accessed 8/18/2022. .

Premiums for long-term care insurance policies vary based on the person’s age and health status when they apply for coverage, gender and marital status. The cost also depends on the amount of coverage the person wants to purchase and the company providing the policy.

Long-term care policies tend to be less expensive the younger and healthier the person is when they purchase the policy. However, Pate says most people don’t think about adding long-term care insurance until they reach 62 years old. A long-term care insurance policy for an average 62-year-old costs approximately $300 per month, she says.

If you’re interested in considering a long-term care insurance policy, Pate recommends speaking with a licensed insurance broker about your options. They can help you search for a plan that best meets your specific coverage needs and aligns with your budget. They can also search for specialized plans that consider chronic health conditions.

Long-term care is a common—and sometimes insurmountable—expense, but the right long-term care insurance policy purchased at the right time can help relieve that financial burden significantly. Not to mention, it expands a person’s care options as they need them, providing a sense of relief for them and their loved ones as they navigate the later years of their lives.