Should I Get Long-Term Care Insurance?

Long-term care insurance may be needed to afford the remaining years of your life or someone you love.

I spoke to my father yesterday and curiously asked him about his thoughts on assisted living facilities. “Absolutely depressing!“, he said. I couldn't agree more that assisted living programs are depressing given it reminds us everyday about our mortality.

Who wouldn't want to stay put in a home they've lived in for years instead? I know I would. Home is a special place that makes us feel comfortable and warm. Ideally, you own your home outright in retirement and no longer have payments. However, this is a topic for another post.

We can only hope that we remain healthy for the rest of our lives, but we'll eventually need some help thanks to injuries or illnesses. Some of us will have the financial strength to comfortably pay for our healthcare in retirement. Others might have wealthy children to rely on. But what if you do not want to burden anybody, and don't have that much money to last?

Buying long-term care could be an ideal solution for your retirement years.


Long-term care insurance generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer's facilities. If home care coverage is purchased, long-term care insurance can pay for home care coverage, such as the cost of a live-in caregiver, housekeeper, or therapist for up to 7 days a week, 24 hours a day.

Clearly, one can imagine this type of care is not cheap, often ranging from $50,000 to $75,000 a year. You might think long-term care (LTC) is only reserved for people ages 65 and up. 

However, that's wrong as LTC insurance can be purchased and used for everyone of all ages. In fact, according to Wikipedia, 40% of those receiving LTC are between the ages of 18-65.

According to a survey done by New York Life Insurance Company, the 2019 national average per night at a nursing home costs ~$300 a day, or some $109,500 a year on average. Given the average stay at a nursing home, or need for long-term care is about 3 years, one would need over $300,000 to pay for long-term care if one doesn't have LTC insurance.

According to the American Association For Long-Term Care Insurance, for 2020, the average annual premium for a 55-year-old couple was $3,050, the same as the prior year.   For a single male, age 55, the average cost reported is $1,700 that was significantly lower than the prior year.

Below is the historical California average nursing home cost per yar.

California Average Nursing Home Cost
YearAnnual Cost

Why Would You Want Long-term Care?

* You don't have the financial capacity to take care of yourself.

* You don't have any children.

* You have children who don't want to help, or don't have the financial ability to help.

* You don't want to feel like a burden on your children, friends, or relatives.

What Determines Long-Term Care Insurance Premium Rates?

Long-term care insurance rates are determined by six main factors: the person's age, the daily (or monthly) benefit, how long the benefits pay, the elimination period, inflation protection, and the health rating (preferred, standard, sub-standard).

According to “America's Health Insurance Plans” The average age of purchasers has dropped from 68 years in 1990 to 61 years in 2005, and the number of purchasers who are under age 65 has increased significantly.

Most companies offer multiple premium payment modes: annual, semi-annual, quarterly, and monthly. Companies may add a percentage for more frequent payment than annual. Options such as spousal survivorship, non-forfeiture, restoration of benefits and return of premium are available with most plans.

According to the website, the following chart below shows a rough estimate of a $219,000 ($150 a day), 4-year benefit LTC plan. As we've already discussed above, it costs $200,000+ already for only a 3 year plan, therefore the annual premiums here are likely 30% too light. 

Please note you can take various different amounts of LTC insurance coverage e.g. 2 year coverage, 5 year coverage, lifetime coverage and benefit amounts of course.

Cost Of Long-Term Care Insurance By Age Range

Below is a example of long-term insurance premiums per year by age range.


As you can see, the older you are, the more expensive LTC insurance will be. That's not a surprise.  Nobody really knows how much long-term care they need, because nobody knows exactly when they will start needing help, and when they will die. However, statistics show that the median life expectancy is 80, and the majority of us will require 2-5 years of long-term care before we die.

The policy premiums of long-term care insurance are created to account for the majority of people. Of course, if you are more conservative and believe you will live a long time, then you should consider getting more coverage.

However, life expectancy and quality of life are two separate issues. You could live until 100 and just need care from ages 98-100. Or, you might be unfortunate to contract something at 75, but live on in an unideal state for 25 years, requiring $2,125,000 (25 X $80,000) to pay for LTC.

Long-Term Care Insurance Conclusion

If you do not have $200,000-$300,000 in liquid cash saved up, are not very healthy, and have no children to rely on to pay for long-term care, you should consider taking out LTC insurance.

You should absolutely also consider getting life insurance way before you need life insurance. The most common types of life insurance for seniors are simplified whole life insurance and final expense life insurance.

Remember, LTC insurance is not necessarily an age issue, as 40% of those receiving long-term care are between the age of 18-65.  Every single major insurance company provides long-term care so shop around for the most competitive rates.

Long-term care is insurance that pays off after a pre-determined period, which is usually after both short-term and long-term disability runs out after 12-36 months if you are working. 

You can tell from the charts that the cost of LTC is getting incredibly expensive, way outstripping the rate of inflation.  As a result, you've seen the average LTC policy holder's age decline to age 61 from 69 according to America's Health Insurance Plans.

Feeling like a burden is a terrible, terrible thing. I can't stand relying on people given my pride and guilt. However, getting long-term care is a personal decision only you can decide to make.  Hope this information helps!


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Photo: Old Man Resting In Santorini, Sam.

43 thoughts on “Should I Get Long-Term Care Insurance?”

  1. Hi Sam, I’m new to your site and really appreciate what you do. Would you consider writing an updated LTC post? Things seem quite different now, with new options such as the combo/hybrid Life Insurance with LTC rider. I’m having a really hard time wrapping my head around all the options and figuring out the best one for my circumstances, and I know I need to get on this soon as I’m in my late 50s. Thank you!

  2. another newbie

    Hi Sam: Did you end up purchasing LTC insurance for you and your wife? Curious as to what insurance you have? My husband and I are 45 and 43 respectively and we have a disabled 3 year old daughter. Appreciate your help.

  3. Hi Sam, any chance of putting out an updated version of this?. The costs have increased dramatically since you wrote this and many insurance companies have left the business (driving up the costs even more). I have been reading a lot recently and talking to people (financial advisors) and I would say the responses have been about 50/50. Half say buy it, half say self fund. One of the biggest risk on the buy it side is that the insurance company can jack up the price at any time for any reason. There is very little regulation on LTC (unlike regular health insurance). Personally I am still on the fence (haven’t bought).

    Thanks for considering it, -Newbie

  4. Andrew Coomes

    Nice post. This hits home for me as well – and is a very emotional topic. My mother will be requiring LTC services for a long time to come and I couldn’t be more thankful that they had the foresight to secure LTC insurance. Unfortunately, the large majority of the baby boomer generation is ill-prepared for the consequences of living longer lives. The statistics for people who will eventually require LTC services are out there and they are startling!

  5. Pingback: The Average Net Worth By Age For The Upper Middle Class | Financial Samurai

  6. We have LTC. I started the process through the Military Officer’s Association of America (MOAA to most) to help control the process through people MOAA trusted and worked with in the past. I had completed a lot of research on my own prior. The rep I ended up working with in Cincinnati was involved only in LTC…not only was her business confined to LTC, but she had personal experience within her family. It was difficult to swallow the yearly premium, but placing the burden on my daughter wasn’t acceptable…we ended up with a three year program, with some other riders, including inflation increases yearly…in my humble view, without inflation protection over time, what once paid for three years, would in fact be much less of a time period…should point out that we did not fund the entire amount, rather only the amount we felt we could not self-fund…if it goes past three years for either one of us, then we will have financial challenges likely…average stay is under three years, thus the reason we made that choice…our financial planner says there could come a time when we might self-fund or a reduction in LTC, combined with additional self-funding capability…to me, even though I hate the premium each year, it is about protecting finances, regardless of your wealth status…I realize there are some who cannot afford the premiums and that is what Medicaid is designed to support, knowing that your assets, whatever they are will be taken to help off-set the costs to the Federal government…saying that if you have less than “x” that you should depend on the government is not acceptable in my view, because the taxpayers can only pay so much…our government is “bankrupt” currently, although they call it deficits…unless we have personal accountability to do what is right for you, your family and the taxpayers, there will be a tremendous burden, including lack of provided care in the future…keep in mind that I am in no way suggesting that certain individuals will need/require taxpayer support, just saying we have many who are intentionally avoiding taking personal responsibility to provide for their long-term healthcare needs…my mother died in the nursing home in Feb, 2012…right after the Medicare 100 days ran out, my Dad had to sign over his house, knowing that would not happen until after his death…it’s a stress on the family, without any financial issues to contend with…I know this from personal experience with three of my four grandparents also dying in the nursing home, albeit my mother’s father for only two months at age 103. Perhaps this will help others in their evaluation.

  7. I have Long Term Health insurance. I saw what custodial care could do a person’s savings when my father developed Alzheimer’s. I recently received a letter from the provider offering significantly lower rates for a three year or six year plan. As unpleasant a thought as an Assisted Living experience would be for an extended period of time, we must adjust our life expectations as we age. I just decided as I as am writing this to keep the open ended policy. When the insurer makes you an offer it is to the insurer’s advantage.

  8. What are everyone’s thoughts on fixed annuity vs. LTC insurance? Would we be better off paying for a fixed annuity in order to pay for potential LTC vs. taking out LTC insurance? What do you see as the tradeoffs?

  9. This is one of the saddest topics I think. At least I know I will be around for my parents if ever they need help after retirement. I hope that would be the case for when we retire too, but I have already started to save a little bit more in hopes of retiring peacefully.

  10. Severi Rantanen

    I sort of agree with your stance that people with under $200,000 should rely on Medicaid as their primary Long Term Care planning tool. However, there is absolutely no reason for somebody with 1.5 million or more in assets not to protect themselves against the potential cost of Long Term Care.

  11. One more point, Mom is a survivor of both Breast Cancer and Stroke!! I know the premiums look a bit high, but we were fortunate to get her qualified for a policy. In the long run, we were able to afford, and preserve somewhat limited assets as she wished to do, and have peace of mind that she will get the care that may be necessary down the road. The life expectancy for someone my moms age in a LTC facility is 3 years.

  12. LTC is a bit daunting, I evaluated several options for my mother and finally settled on 200/day benefit costing $567/mo. she is currently 78 and relatively good health. We have been paying premiums from her mandatory distributions for 6 yrs. now. Upon reflection, we are paying for too much benefit, we should have calculated in her Income sources that do not deplete her ability to continue generating that income. Currently, with Social Security and Mandatory distributions she makes roughly $36k per year, and lives comfortably. That amount would cover about 1/2 of her annual expenses for LTC. So I figure we should have taken 18K and applied toward anticipated annual cost of LTC facility. Just a guess, but I think a 150/day benefit would have been more appropriate.

    Chose not to include riders and uped the daily benefit amount, as riders are quite expensive. a good tactic had we incorporated her present income stream.

    For myself, I have $100/ day benefit for 5 yrs. to supplement expected income stream. You mentioned if not 200-300K in cash laying around the need for a policy, but don’t dismiss the anticipated income stream as well.

  13. We can always do with insurance, the trouble is as you demonstrate, the costs get prohibitively higher the older you get. You can also find that certain companies will refuse to cover “pre-existing” conditions which makes getting insurance even harder as you are more likely to become ill as you get older.

  14. I think long term care insurance is the way to go. I provides the needed protection for you should you require the additional care that Medicare or Medicaid or your primary insurance wouldnt cover. I think purchasing it if you can is definately the way to go. I read an article a while back, I cant remember where but it mentioned how older people were divorcing after being married for 50 years because one of the individuals health condition was spending all of their money and to make sure that the other spouse had money to live they divorced before all the assets were spent. You spend an entire life with your spouse and want to go to the grave together but have to divorce because our system will bankrupt the healthy spouse at an age where they cant just go out and find a job. Sad but you have to do what you have to do. At 29, I really havent thought about that type insurance yet.

  15. I know someone in her 60’s who purchased LTC a few years back and it was totally worth it for her. She is able to get some of her help reimbursed up to $1,100 a month (she has people come and give her B12 injections). And, she’s only paying about $80 a month for the coverage. Totally worth it in my book. When I turn 50, I’ll be applying for AARP and signing myself up for LTC! (Oh, why 50? Minimum age for AARP membership.)

  16. Great post, and I love seeing the prices broken out by age group. 60 years-old is the mark on the wall and the turning point. You need to buy it before then to really lock in a low rate.

  17. Craig mathews

    LTC insurances provide so much of security that one is never left alone in times of utter need. However, it costs too much. Though the concept is really a good one,but to afford such insurances is beyond the imagination of common people.

  18. Darwin's Money

    I don’t think it’s worth it. Here’s why – it’s basically a gamble. The insurance companies price their premiums based on actuarial data. This data includes, of course, horrendously unhealthy Americans. So, you’re basically subsidizing their poor health. You don’t get what you think you pay for. For instance, you might pay $4K per year for like 20 years to find out when you actually need it that it doesn’t even kick in until after you’ve exhausted 180 days out of pocket. OK, so you spent 5 months in assisted living all on your own dime and the policy never even kicked in. In theory, if you’d invested all those premiums yourself over the 20 years, you would have been able to pay out of pocket for the same term they cover and then some. There are millions of different types of policies with terms, costs, what’s covered and what isn’t.

    The bottom line is it’s like buying an extended warranty on electronics – only the retailer wins.

    1. A very good point, which is why insurance industries get such a bad wrap. They should be under a mega magnifying class by the government.

      The prob is, people lack discipline saving for when that time comes!

  19. I am still debating long term care insurance. I mis-trust that the life insurance companies will be around still when I need to draw on the policy. I’ve read that most people who buy it will eventually need to use it and will get all of their premiums back in just a couple of years. If that is the case, the insurance company business models are out of whack which would cause some of them problems, or cause them to deny coverage somehow.

  20. I have been trying to convince my mom to get this, but she really doesn’t have the money for the premiums (which obviously means she doesn’t have the money to pay for her care should she need it). I would like to split the cost of the premiums with her, but she just isn’t interested. As her only living child, all of the responsibility will fall on me.

    1. Melissa, if you can’t convince her tell her to call me. My mom didn’t have anything in place when she became ill and it’s been a nightmare for me ever since. I had a choice, pay the nursing home bills or bring her home and pay for care givers. As you can imagine instead of saving for me and DH future we are paying for her care. When our time comes we won’t qualify for a safety net and we’ll be in trouble.

      Anyone who thinks there kids will take care of them need to think again. Yes they may but the physical and financial stress you put on them and taking from their future is not right. (I’m being kind here)

  21. After my step-father died, my mother bought LTC insurance. She decided to go with a plan that’s a little more expensive but that will, if she never uses it, refund a portion of the premiums to my brother and I upon her death.
    I wish my MIL has LTC coverage. She had total knee replacement in mid-October and was supposed to be in rehab 6-8 weeks. She’s still in a facility after nearly dying over New Year’s. At this point, we don’t know if she’ll ever be able to go back to living independently or not. She’s been living on disability for 10+ years, but she has a condo with renters that means she makes too much to qualify for Medicaid.
    We’re at the point where we need to consider selling her condo or buying it ourselves, and perhaps even spending some of the money we saved up to cover medical costs in order to get her on medicaid so that she can afford to go into care.
    Of course, she just switched facilities and the thearpy staff seems more engaged than at the last place, so we’re still a little hopeful. Hopeful, but trying to line up the legalities of what may have to happen.

    1. Having that refund option if she doesn’t use it, it definitely sounds like a more palatable insurance to undertake. Helps share the costs with the insurer, provided they are not greedy.

  22. I think LTCi is absolutely essential. I don’t think kids should be born just to take care of their parents as they age. I think that is a terribly selfish reason to have a child, making them “pay back their parents” for the gift of life. I’ve been looking into this, and plan on getting LTCi for my husband and I when we hit our late 40’s, early 50’s. My husband’s family has a long history of cancer, so for him (in his words) it’s not just a matter of if but when.

    My aunt’s husband just passed away from Prostate cancer. It was very sudden, and from symptoms to death it was under 2 years. In that time, they spent half a million dollars on treatment for him. She was the one who informed me that LTCi is an absolute necessity. I’m going to listen to her on that matter.

    1. Kris, that is very thoughtful of you not wanting to burden your kids!

      I don’t have a problem caring for my parents, no questions asked. I strongly feel it’s my duty.

  23. My relative is in poor health and has been in a nursing home for a few years. She has a LTC policy that has been her saving grace. She would have run out of money long ago were it not for that policy!

  24. My mother just went into a nursing home. Additionally, I used to work in various places in my region. Having that background, along with further education, I would offer to anyone looking at LTC placement some tips.
    First and foremost, talk to an attorney to plan as much as possible for the estate, et al. Things can get complicated, and sorting out what you can ahead of time helps. As to the actual facility itself. Visit as many places in whatever distance you are comfortable driving. Visit them all for comparison. Visit at all hours of the day: 6a.m., noon, midnight, etc. Talk to staff and clients; not just the admitting staff, ALL the staff- at least random staff.

    Then step outside the box and talk to hospital staff about any possibilities you’ve id’d. Talk to EMS personnel as well. Nurses and Doctors and Medics know things about facilities they might share- especially after you mention you are considering placing a loved one.

  25. I bought LTC insurance a number of years ago to avoid this problem. I do not expect to go into a facility, but home care is expensive too. I was thinking of a pretty little Swedish girl who would cook for me, bathe me and tell me silly stories. She will need to be very near sighted and patient since I probablywill be difficult! They are expensive caretakers!

  26. It is interesting, the majority of people who end up purchasing LTCi (at least in my office) has had to pay for a parent’s LTC.

    I think my parents are woefully underinsured but at this point it doesn’t matter since both are uninsurable!

  27. LTC is very important for people with assets to protect. My father in law decided to avoid this because “I’m healthy.” Today he has Parkinsons and we’re confronting the ogre of him spending their life savings on LTC while my very healthy mother in law worries about not having enough left for herself.

    I will say, though, that if you’re worried about paying the day-to-day bills, LTC is irrelevant. If there’s nothing to protect, Medicaid is currently a “safety net.”

  28. Sunil l Expedited Wealth Building through Entrepreneurship

    I am my parents’ long term care insurance, which means that I should get myself covered. I visited the topic last year but got distracted somehow. Will definitely get the coverage this year.

    Have you looked into providers? And if so what are some of the best and why in your opinion? Perhaps someone else can chime in on these as well???

  29. This was a very emotional topic for me. Unfortunately my father passed away years ago but I would agree that LTC is the better way to go. The only way assisted living facilities could change the minds of everyone is if they changed their title. The living longer and better than ever facility.

    1. I’m sorry for your loss Jai. Puts things in perspective and hammers home the point that we should try and get the best care for our parents, or for ourselves when we are older.

      Let us push for the “Living Longer And Better Than Ever Facility”!

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