The Pros & Cons of Long-Term Care Insurance

Long-term care (LTC) insurance offers a form of financial protection in cases where individuals require paid help in caring for themselves during their senior years. Statistics from a 2007 Genworth Financial survey show the average annual cost of a private room in a nursing home at $74,806. While LTC insurance can provide some financial backing, actual coverage for certain services may be lacking.


If you become disabled due to injury or old age, you can benefit from long-term care insurance. LTC services are performed within an assisted living facility, at home and within nursing home facilities, according to the InsureLog website, an insurance reference site. Costs for covered LTC services appear as per day or per month rates that correspond with a specific policy coverage amount and duration period for covered services. People who prefer the higher coverage amounts and/or longer duration periods pay higher costs for long term care insurance.


Long-term care policies are typically customized according to the features selected by the policyholder, according to the Free Insurance Advice Resource Center. And while this gives individuals a degree of choice as to which services are included, knowing which services will be needed ahead of time is a hit-and-miss process. In effect, individuals may choose services they won’t need or not choose service that they will need. Ultimately, LTC insurance can help protect a person’s assets from being drained by long term care expenses.

Policy Terms

In addition to the coverage options available under long-term care insurance, certain policy terms and conditions also apply. According to the Free Insurance Advice Resource Center, policy terms include what conditions qualify as a disability, elimination periods and out-of-pocket expenses. Out-of-pocket expenses define deductible and copay amounts that must be paid in order for coverage to apply. Elimination periods spell out the number of days that must pass within a nursing home or assisted living facility before actual LTC coverage applies. According to InsureLog, definitions for disability may require individuals to show they’re unable to perform two or more daily living skills, such as dressing or eating, before they actually qualify to receive LTC benefits.


The high costs of health care make long-term care coverage an expensive type of insurance protection. According to InsureLog, yearly policy costs, as of 2010, can run anywhere from $2,000 to $4,000 depending on the types of services covered and the age of the policyholder at the policy start date. Generally, the younger and healthier a person is, the cheaper the coverage will be; however, high yearly premium costs can quickly become unaffordable as a person ages, according to the Free Insurance Advice Resource Center. In addition, policy coverage amounts may not cover actual expenses by the time long-term care is needed due to the effect of inflation on health care costs.


Long-term care insurance can benefit people who have a fair amount of assets and savings by shielding these reserves; however people with little to no retirement savings may very well qualify for Medicaid by the time LTC services are needed. Those who opt for LTC coverage may consider purchasing an inflation protection option to prevent health care costs from outpacing policy coverage amounts, according to the Free Insurance Advice Resource Center. Protections should also be taken to guarantee a policy won’t be canceled due to the policyholder’s age, or physical or mental status.