Long-Term Care Insurance Costs

Long-term care insurance helps cover the cost of long-term care you may need later in life — such as nursing home care — once you need help with activities of daily living (ADLs). A policy can help ensure you receive the care you need while protecting your savings.

The best long-term care insurance policies can cost anywhere from $900 to over $7,000 per year for an individual. But many factors affect the cost of a policy, including your age and the coverage amount you choose.

In this guide, we provide long-term care insurance costs by age as well as tips for buying a policy and saving money.

Table of contents

• How much does long-term care insurance cost?
• Costs of long-term care services without insurance
• How to get long-term care insurance
• Long-term care insurance costs FAQs
• Summary of Money’s Long-Term Care Insurance Costs

How much does long-term care insurance cost?

While the cost of a long-term care insurance policy depends on personal factors — such as your sex, age and health — it also varies based on the insurer and type of policy you choose.

There are two main types of long-term care insurance policies in the market: traditional or stand-alone policies and linked benefit or hybrid policies.

Stand-alone policies help cover long-term care expenses, including home care, assisted living and nursing home care. Linked benefit policies, on the other hand, includes both life insurance and long-term care coverage. These policies can provide coverage for your long-term care if you need it, but will also pay a guaranteed death benefit percentage to your beneficiaries when you die.

Linked benefit policies cost considerably more than traditional ones. Based on sample policy data from the American Association for Long-Term Care Insurance (AALTCI), a 55-year-old single male can pay $3,030 more per year for a linked benefit policy with $180,000 in LTC benefits and a minimum death benefit of $120,000 than they would for a comparable traditional policy offering $165,000 in LTC benefits. A female of the same age purchasing the same level of coverage can pay around $2,420 more for a linked benefit policy.

As the AALCI points out, however, this is not a true apples-to-apples comparison, as there is a lot of variability among linked-benefit policies.

Traditional long-term care insurance costs by age

The following tables include stand-alone long-term care insurance policy costs by age based on data from the AALTCI. The costs are based on policy applicants with “select” health. The AALTCI notes that individuals with “preferred” health — i.e., people with few or no medical conditions — may get discounts for being in good health.

Linked benefit long-term care insurance costs

The AALTCI provides sample pricing data for linked benefit policies, as shown below. These figures are from one insurance company and should only be used as examples. Keep in mind that policy details can vary significantly by company. You can find more examples on the AALTCI’s Linked Benefit Price Index page.

Factors that influence LTC insurance costs

Your long-term care insurance premiums can vary based on the following factors:

• Your age and health: Rates are lower when you are younger and healthier. When you apply for a policy, the company will require you to undergo a health screening, which can involve reviewing your medical records or an in-person health assessment. Some health conditions may make you ineligible for coverage — for example, you may be denied a policy if you have Alzheimer's disease when you apply.

• Your gender: Women typically pay higher premiums than men because they tend to live longer and are more likely to require long-term care.

• Benefit period: Your policy’s benefit period is how long it will help pay for your long-term care. Companies typically offer policies that cover one to five years of benefits, and some offer lifetime benefits. The longer the benefit period, the more expensive the policy will be.

• Daily benefit: The daily benefit amount is how much your policy covers each day. Higher limits cost more.

• Elimination period: The elimination period is the time you must wait from the moment you’re eligible for coverage to when your policy starts paying. You’ll have to pay for your care out of pocket during this waiting period. Elimination period options typically include 0, 30, 60, 90,180 or 365 days, with the longer periods costing less.

• Inflation protection: The cost of long-term care increases over time. Adding inflation protection to your policy will help your benefit grow (typically by 1% to 5% annually) to keep up with inflation. Understandably, adding this optional benefit will increase the overall cost of your policy.

• Number of people insured: Married couples can save money on their policies by applying for coverage together. Companies typically offer a higher discount percentage if both individuals qualify for coverage, but they can still get a premium reduction if just one is approved.

• Your insurance company: Rates can vary significantly by insurance company. It’s especially important to shop around by getting quotes from multiple companies before making a decision.

Costs of long-term care services without insurance

While long-term care insurance may appear expensive, Howard Sharfman, senior managing director at NFP Insurance Solutions, says you must consider the cost of care.

Long-term care expenses range from a median of $1,690 per month for adult day care to $9,034 per month for a private room in a nursing home, according to Genworth’s Cost of Care survey. What’s more, the cost of living increases each year, and Genworth predicts that a private nursing home room will cost $11,787 per month by 2030.

“Long-term care coverage is expensive when we only look at the premium. However, the value is exceptional. First, the premium is not expensive when compared to the financial cost of long-term care and home health care,” says Sharfman.

He also notes that having a policy that allows you to get appropriate long-term care can help alleviate the strain on your family members, who would otherwise need to be your caregivers.

The table below includes the monthly and annual median costs for various types of long-term care if you don’t have insurance.

How to get long-term care insurance

When buying long-term care insurance, it’s essential first to determine what coverage you need.

Kim Beil, head of insured and cash solutions in Janney Montgomery Scott’s wealth management department, says there are policy options for people in different situations. “It’s important to work with a financial advisor to determine how the cost of funding long-term care insurance fits into an overall financial plan,” she recommends.

Here are some general steps to follow when shopping for a policy:

1. Contact a financial advisor: When starting the process, contact your financial advisor for guidance. They can help you decide what type of coverage you need.

2. Get quotes from multiple companies: Each insurer offers different prices and coverage options. A company that’s cheaper for someone else might not be cheaper for you. You can contact your state’s Department of Insurance to find out which companies offer long-term care insurance in your state. If you work with a financial advisor, they can also help with that. During the underwriting process, insurers may ask for medical records, a doctor’s assessment or have you answer health questions to determine your eligibility.

3. Compare costs and coverage: Once you receive your quotes, take your time to review the costs and coverage options in detail. This can help you find the option that offers you the best value. When looking at costs, remember that insurers can raise your rates in the future, so see if you can find information about the company’s rate increase history.

4. Contact your agent or company representative with questions: Throughout the shopping process, do your research and ask questions. You can contact your agent or a representative from the company to receive guidance. Depending on the company, this may also help you unlock certain benefits, like a reduced elimination period for specific types of care.

5. Choose a company and decide on policy details: Decide which company you want to purchase a policy from and choose your details, including an elimination period, benefit period, daily benefit, inflation protection rider and more. The last step is to purchase it.

How to save on an LTC policy

Some LTC insurance policies can be pricey, depending on your coverage, but you can save money in some ways.

Some options include lowering your coverage limits to make your policy more affordable. While this will cause you to pay more for your care out-of-pocket, Sharfman says it’s “always better to have some coverage than no coverage.”

Here are 10 ways you can save money on your long-term care insurance policy:

• Shop around: As mentioned, getting quotes from multiple insurers is important so you can compare coverages and costs to find the best deal.

• Buy a policy early: You can save money on a policy if you buy it when you are younger and healthier. The AALTCI suggests that the best age to purchase is around 55. If you’re in good health when you apply, you may receive a discount that stays active throughout the lifetime of your policy, even if your health changes. However, buying a policy too early can mean you’ll pay premiums for a long time, so it’s important to find the sweet spot.

• Add an elimination period: Choosing a longer elimination period will lower your annual premium. However, doing this means you’ll have to pay more out of pocket when you start receiving care before your policy starts covering it.

• Choose a shorter benefit period: Lifetime benefits are very expensive. To save money, choose coverage that lasts a specific number of years.

• Choose a lower daily benefit limit: Likewise, a lower daily limit is also more affordable.

• Look into coverage through your employer: Some employers offer group long-term care insurance policies as an employee benefit, in which they cover a portion of the policy cost. Remember that coverage limits might be lower than what you’d get with an individual policy, so be sure to weigh your options.

• Buy a policy with your spouse: If both you and your spouse want coverage, buying a policy together is cheaper than doing so individually.

• Consider a linked benefit policy: If you want a life insurance policy with long-term care benefits, you can consider a hybrid policy that includes both.

• Ask about discounts: Some insurance companies offer discounts for various things. The most common is for being in good health, but some also offer discounts if you’re part of a particular organization and more. Ask your insurance agent or company what’s available.

• Pay annually: Some companies offer the option to pay annually or monthly. You may be able to save money if you pay for the policy upfront for the year.

Summary of Money’s Long-Term Care Insurance Costs

Long-term care insurance costs can range from around $900 to over $7,000 annually for an individual. However, costs vary significantly based on your sex, age and health, as well as the coverage amount and insurance company you choose. While the cost can be steep, it can save you money in the long run and help ensure you receive the long-term care you need later in life.

You can save money by altering your policy’s coverage options, but the most important thing to do is shop around. Compare quotes from multiple companies because the cost will likely vary significantly by insurer.