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Savvy Living

Savvy Senior

Should I Buy Long-Term Care Insurance?

My wife and I have thought about purchasing a long-term care insurance policy, but we hate the idea of paying expensive monthly premiums for a policy we may never use. Is there a good rule of thumb on who should or should not buy long-term care insurance?

There are two key factors you should consider when determining whether purchasing a long-term care (LTC) insurance policy is a smart decision for you and your wife. One factor is your financial situation and the second is your health history. Currently, around 8 million Americans own a policy.

Who Needs LTC Insurance?

As the cost of LTC – which includes nursing home, assisted living and in-home care – continues to rise, it is important to know that most people pay for LTC with personal savings, with Medicaid (when their savings is depleted) or through an LTC insurance policy. National median average costs for nursing home care today is around $92,000 per year, while assisted living averages around $50,000 per year.

While national statistics show that about 70% of Americans age 65 and older will need some kind of LTC, the fact is, many people do not need to purchase an LTC insurance policy.

The reasons stem from a range of factors, including the fact that relatively few people have enough wealth to make purchasing a policy worthwhile. Seniors with limited financial resources who need LTC turn to Medicaid to pick up the tab after they have depleted their resources.

Another important factor is that most seniors who need LTC only need it for a short period of time, for example, while recovering from surgery. For those people, Medicare covers in-home health care and nursing home stays of 100 days or less following a hospital stay of more than 3 consecutive days.

So, who should consider buying a policy?

LTC insurance policies make the most sense for people who can afford the monthly premiums, and who have assets of at least $150,000 to $200,000 or more that they want to protect. The calculation of assets to protect does not count a home and vehicle.

Another factor to weigh is your personal and family health history. The two most common reasons seniors need extended long-term care is because of dementia or disability. Almost half of all people who live in nursing homes are 85 years or older. You and your wife should consider your family histories for Alzheimer's, stroke or other disabling health conditions, and whether your families have a history of longevity.

You also need to factor in gender. Because women tend to live longer than men, they are at greater risk of needing extended LTC.

Choosing LTC Insurance

After evaluating your situation, if you are leaning towards buying an LTC policy, be sure to do your homework. The cost of premiums can vary greatly and ranges anywhere between $2,500 to $8,000 per year for a couple. The cost will depend on your age, the insurer and the policy's provisions.

Also, note that because of COVID-19, it may be more difficult to qualify for coverage now if you are age 70 or older, in a high-risk group or have had a positive COVID-19 test.

To find a policy, get an LTC insurance specialist who works with a variety of companies. You can visit the American Association of Long-Term Care Insurance website ( to locate a provider.

Another option you may want to consider is a hybrid policy that combines long-term care coverage with life-insurance benefits. These policies promise that if you do not end up needing long-term care, your beneficiaries will receive a death benefit.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Published September 25, 2020
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