Here's something most people don't think about until it's too late: Medicare doesn't cover long-term care. If you need help getting dressed, bathing, or managing your daily routine because of aging, illness, or injury, you're largely on your own. That's where long-term care insurance comes in. It's not the most exciting topic, but it might be one of the most important financial decisions you make for your future.
Long-term care insurance helps pay for services when you can no longer handle basic tasks independently. We're talking about nursing homes, assisted living facilities, adult day care, and even in-home care. With nursing home costs averaging $112,000 per year in 2024, this coverage can protect your retirement savings from being completely wiped out by care expenses.
What Long-Term Care Insurance Actually Covers
Long-term care insurance kicks in when you need substantial help with everyday activities. Specifically, most policies pay benefits when you can't perform at least two out of six activities of daily living, or ADLs. These include bathing, dressing, toileting, transferring in and out of bed or a chair, eating, and continence. There's also coverage if you have cognitive impairment from conditions like Alzheimer's or dementia, even if you can still handle most physical tasks.
Your policy can cover various care settings. Nursing home care for a semi-private room costs about $111,000 annually in 2024, while a private room runs closer to $128,000. Assisted living facilities average $66,000 per year. Home care, which many people prefer, costs around $51,000 annually if you need help six hours a day, five days a week. Your policy will have a daily or monthly benefit amount—commonly $150 to $250 per day—and a total benefit pool that determines how long your coverage lasts.
Most people buying coverage in 2024 choose a benefit window of about four years with a daily benefit around $200. That translates to roughly $292,000 in total coverage. You'll also choose an elimination period, typically 30, 60, or 90 days, which is how long you pay out-of-pocket before insurance kicks in—think of it like a deductible.
The Best Time to Buy Is Earlier Than You Think
Most experts agree the sweet spot for buying long-term care insurance is between ages 55 and 65. Here's why: if you apply in your 50s, only about one in ten applicants get rejected for health reasons. Wait until your 60s, and that jumps to two in ten. In your 70s? Four in ten people don't qualify at all. Nearly half of applicants age 70 or older get turned down.
The cost difference is substantial too. Premiums increase 2-4% annually in your 50s, but jump to 6-8% per year in your 60s. A couple who waits from age 65 to 75 will see their premiums nearly double—a 92% increase according to industry data. But buy too early, say in your 40s, and you're paying premiums for decades before you might need benefits.
The mid-50s to mid-60s window gives you the best balance. You're likely still healthy enough to qualify, premiums are more manageable, and you're close enough to potential need that you won't pay for coverage you never use.
What You'll Actually Pay
In 2024, premiums for long-term care insurance vary widely based on your age, gender, and the coverage you choose. A 55-year-old man buying a policy with $165,000 in benefits and no inflation protection pays around $950 annually. A 55-year-old woman pays $1,500 for the same coverage. Yes, women pay significantly more—about 40-50% higher premiums—because they live longer and are more likely to use their benefits.
If you add inflation protection—which is crucial since care costs rise every year—expect to pay more. A 55-year-old man might pay $2,075 annually for coverage that grows from $165,000 today to $400,500 at age 85. Women pay nearly double at $3,700 per year. For couples both age 55, combined premiums with inflation protection run about $2,080 to $2,600 annually.
Wait until age 60, and those numbers climb. Men pay around $1,200 to $2,060 annually depending on inflation coverage, while women pay $1,900 to $3,325. Monthly costs across all ages range from $79 to $533, putting long-term care insurance in the same ballpark as a car payment for many people.
The good news? Premiums are level, meaning once you buy, your rate is locked in based on your age at purchase. The insurance industry paid out over $16.8 billion in claims in 2024, with major carriers paying more than $18 million in benefits every business day as of early 2025.
Is Long-Term Care Insurance Right for You?
Not everyone needs this coverage. If you have substantial assets—say $2 million or more—you might be able to self-insure and pay for care out-of-pocket. On the flip side, if you have limited assets and income, you'll likely qualify for Medicaid, which covers long-term care after you spend down your resources.
The people who benefit most are those in the middle: you have retirement savings you want to protect, but not enough to comfortably absorb $100,000+ per year in care costs. If paying premiums would strain your budget, though, it's probably not the right move. You need to be able to afford the premiums comfortably throughout retirement.
Consider your family situation too. Do you have children who could provide care, or would you be relying on professional services? Do you have a family history of conditions like Alzheimer's that require extended care? These factors should influence your decision.
How to Get Started
Start by getting quotes from multiple insurers. The market has consolidated to about 15 active carriers in 2024, so work with an agent who can compare options across companies. Look at both traditional long-term care policies and hybrid policies that combine life insurance or annuities with long-term care benefits—these linked-benefit products have become more affordable recently.
When comparing policies, pay attention to the daily benefit amount, benefit period, elimination period, and inflation protection. Don't just buy the cheapest policy—make sure it will actually cover the type of care you'd want. Read the fine print about what triggers benefits and any exclusions or limitations.
The application process involves health underwriting, so be prepared to answer detailed questions about your medical history. Some conditions like Parkinson's, recent strokes, or certain types of dementia can disqualify you. The healthier you are when you apply, the better your chances of approval and lower rates.
Long-term care insurance isn't right for everyone, but if you're in your mid-50s to mid-60s with assets to protect, it's worth a serious look. The peace of mind knowing your retirement savings won't be devastated by care costs—and that you'll have choices about where and how you receive care—can be invaluable. Don't wait until you think you need it. By then, it might be too late to qualify.
