Long-term care costs can consume savings, Medicare only pays for limited services and you may not qualify for Medicaid. Long-term care insurance could be your solution.

What is Long-Term Care Insurance?

You pay a non-returnable monthly premium for long-term care insurance, which pays care costs covered by the policy. Hybrid long-term care insurance includes life insurance, with care costs paid from the death benefit (which is unaffected if you don’t receive long-term care).

The Costs of Long-Term Care

As of 2021, the national monthly median fees for long-term care are:

• Homemaker Services: $4,957
• Home Health Aide: $5,148
• Adult Day Care: $1,690
• Assisted Living: $4,500
• Nursing Home Facility (semiprivate room): $7,908
• Nursing Home Facility (private room): $9,034

The Pros and Cons of Long-Term Care Insurance

Insurance premiums are expenses you won't get back if you don’t later need long-term care. However, if you do, you’re less likely to use your assets to cover costs.

You could pay premiums for many years, exceeding the costs of the care you receive. However, costs may exceed your total premiums if your care is lengthy or expensive.

Policies impose coverage limits, such as maximum long-term care periods, and only cover certain services. Therefore, confirm your policy meets your needs.

Someone turning 65 now has an almost 70% chance of needing long-term care. This also means almost one-third won’t need care. Therefore, you should carefully assess your chances and potential costs before making a decision on long-term care insurance.