Long-Term Care Insurance: What It Costs

Long-term care insurance pays for the help people need with daily activities - bathing, dressing, eating, moving - when they can no longer manage alone. It is one of the hardest products to price and to buy well, because premiums depend on age, health and the length of care you choose to insure, and because care itself has become steadily more expensive.

The four numbers that set your premium

• Daily or monthly benefit. How much the policy pays toward care, often $150 to $300 a day.
• Benefit period. How long it pays - typically 2, 3 or 5 years.
• Elimination period. How many days you pay out of pocket before benefits begin, commonly 30 to 90 days.
• Age and health at purchase. Buying younger dramatically lowers the premium, but also means paying for many more years.

Lifetime benefit ≈ daily benefit × benefit-period days

Typical premiums

A couple in their mid-fifties buying a shared policy often pay several thousand dollars a year combined. Buying in your sixties doubles or triples individual premiums, and a health change can make you ineligible entirely.

Alternatives when premiums are too high

• Hybrid policies. Life insurance or annuities with a long-term care rider, which pay a death benefit if care is never needed.
• Self-funding. Designating savings or home equity for care, accepting the risk that you may need more than you set aside.
• Shorter benefit periods. Insuring two or three years rather than a lifetime cuts the premium sharply and still covers the most common care duration.

The rate-increase caveat

Traditional long-term care policies have historically seen premium increases after purchase. Insurers must justify them, but they happen. Budget for some risk of a rising premium, or choose a hybrid product with fixed pricing.

Frequently asked questions

Doesn't Medicare cover this? Medicare covers short skilled-nursing stays after a hospitalisation, not the ongoing custodial care most people need.

Doesn't Medicaid pay? Only after you have spent down most of your assets, and often only at facilities that accept it.

Estimate your own premium with the calculator below.