Understanding Long-Term Care Insurance (LTCI)

The future is full of unknowns, but making the right preparations now can provide financial security and peace of mind for a wide variety of circumstances. Even if you enjoy living independently and plan to continue doing so, it’s important to consider what you would do if your needs changed and you required support. Could you easily access and afford long-term care?

Long-term care insurance (LTCI) is one solution for covering future care costs. If you’re considering this option, read on to learn about this form of insurance and find answers to common questions so you can plan with confidence for your future.

What Is Long-Term Senior Care Insurance?

Long-term care insurance (LTCI) is an optional form of insurance designed to cover costs associated with long-term care. Policyholders pay regular premiums, and if they ever need support, they file a claim with their LTCI provider. Depending on the terms of the policy, it may cover all or part of the costs of their care. This care can take many forms, including in-home support or residential care in an assisted living, memory care, or long-term care community.

LTCI providers may determine a person qualifies for care coverage if a health care professional certifies they need assistance due to cognitive challenges or the inability to perform at least two activities of daily living on their own.

Long-term care insurance offers a level of predictability in your budget, protecting you from potentially unmanageable health care costs down the road. However, it is not a perfect solution. Terms often include specific dollar limits on daily benefits, a finite coverage period, and "elimination periods" that require you to pay out of pocket for 30, 60, or 90 days before the insurance policy takes effect.

Senior Care Insurance FAQs

Not sure whether to consider purchasing an LTCI policy? It’s always wise to consider your personal financial situation and health status, but these answers to common questions also can help inform your decision-making process.

Does Medicare help with long-term care costs?

No. Although Medicare may help cover certain forms of medical care provided in a long-term care setting, it does not cover the cost of residential care. Unfortunately, many people misunderstand Medicare coverage and may fail to plan and budget accordingly. A 2024 survey found that 62% of adults 50 and older believe Medicare will cover a move into a long-term care community. In reality, most people pay for long-term care out of pocket or through Medicaid.

What is the best insurance plan for seniors?

When it comes to LTCI, there is no single best policy; the answer depends on your needs and preferences. To find a good fit, research providers and only consider those that are well respected and known for good customer service. You should also compare policy terms such as daily and lifetime benefits, inflation protection, benefit triggers, and elimination periods. Understanding the fine print is key to ensuring your LTCI policy is a good investment.

What is the biggest drawback of long-term care insurance?

LTCI policies come with several drawbacks, making many question whether they are worthwhile. Perhaps the biggest drawback to LTCI is that it’s a costly investment that, in many cases, can offer nothing in return. If you’re fortunate enough to enjoy good health and remain independent long term, you won’t receive any benefits from your LTCI policy. If you do need assistance, your investment could pay off, but the benefits still come with stipulations.

What is the best age to buy long-term care insurance?

Usually, individuals and couples who purchase LTCI do so in their mid-50s to mid-60s. The younger you are when you purchase your LTCI policy, the lower the premiums, but you’ll likely end up paying more in the long run. According to AARP, the best time to purchase a policy is likely between 60 and 65, as this age range offers the best balance of monthly affordability and a lower lifetime cost.

Alternatives to Long-Term Care Insurance

A majority of Americans will need some form of long-term support at some point, and yet, just 3% to 4% of adults over age 50 hold LTCI policies. That low percentage is likely due, in part, to a lack of awareness around future care planning, but even among those taking steps to secure their future, many consumers are unimpressed with LTCI. Fortunately, LTCI is not the only way to ensure predictability and peace of mind. Consider these valuable alternatives to LTCI.

Private Pay Savings

You can choose to "self-insure" by setting aside money each month (perhaps the same amount you would have paid in LTCI premiums) specifically for future care. If the need arises, you can draw on these liquid savings to pay out of pocket, giving you total control. The primary benefit is that, if you never need care, that money remains in your estate rather than being "lost" to insurance premiums.

Hybrid Life Insurance with LTCI Riders

Hybrid policies combine a death benefit with long-term care coverage. If you need care, you can accelerate the death benefit to pay for it while you are still alive. Unlike traditional LTCI, which is "use it or lose it," a hybrid policy ensures that if you don't use the care benefits, your beneficiaries still receive a payout upon your passing. These policies also typically feature locked-in premiums that won't increase over time.

Trust Planning with Designated Care Resources

A trust can be a useful tool in estate planning. Particularly if you may be eligible for Medicaid coverage for long-term care, you may want to consider transferring assets (e.g., your home) into an irrevocable trust at least five years before applying for coverage. This prevents these assets from being "spent down" on long-term care costs, eventually allowing you to qualify for government assistance while preserving an inheritance for your family.

Continuing Care at Home

Continuing care at home (CCaH) programs allow you to stay in your current home while receiving wellness benefits and coaching to help you thrive. You pay an initial entry fee and a monthly membership fee, which ensures access to care should you ever need it. This care will either be fully covered or partially covered by your membership, depending on the payment model you choose. CCaH programs, like WellAhead — A WesleyLife Well-Being Experience, can be more advantageous than LTCI because they offer guaranteed benefits, whether or not you ever need additional support.

Learn more about the differences between LTCI and WellAhead.

Financial Planning with Confidence

Ultimately, choosing how to fund your future care is a highly personal decision that requires balancing your current budget with your long-term goals. Although long-term care insurance may be worth considering for some, exploring alternatives can help you find a more flexible or cost-effective fit. Taking the time to prepare today ensures that you can face the future with confidence, knowing your health and your assets are well protected.

Learn more about informed financial planning in The Complete Guide to Senior Living Finances.