Long-Term Care Insurance Cost by Age: What to Expect

by | May 13, 2024

Understanding long-term care insurance cost by age is crucial for a comprehensive retirement plan. Often overlooked, this type of insurance is designed to cover expenses that are not typically paid for by health insurance, Medicare, or Medicaid. Long-term care insurance provides coverage for services such as in-home care, assisted living, adult daycare, respite care, hospice care, nursing home, and Alzheimer’s facilities.

The cost of long-term care insurance is directly related to the age at which you purchase the policy. Generally, the younger you are when you buy the policy, the lower the premiums will be. This is because insurers take on less risk when insuring younger individuals who are less likely to need immediate care. However, as you age, the probability of requiring long-term care increases, and consequently, so do the premiums. Proactive retirement planning involves considering these costs well ahead of time, so you’re not caught off guard by the steep expenses associated with aging.

If you’re looking to catch up with your retirement planning, we’re here to help. Contact us today for a complimentary consultation with one of our expert Advisors. They’re ready to provide personalized guidance to help you achieve your retirement goals. Don’t miss this opportunity to take control of your future. Schedule Your Free Consultation Now!

Why Long-Term Care Insurance is Critical for Retirement Planning

An image showing an elderly person being assisted by a caregiver, symbolizing long-term care insurance.

As individuals enter their golden years, the likelihood of requiring some form of long-term care significantly increases. The reality is that about 70% of people over 65 will need long-term care at some point in their lives, according to the U.S. Department of Health and Human Services. Moreover, the costs associated with long-term care can be staggering and can quickly deplete retirement savings if not properly planned for.

Medicare may cover short-term stays in a skilled nursing facility or a limited amount of home health care, but it is not designed to pay for long-term care services that are custodial in nature. These are the types of services that assist with activities of daily living, such as bathing, dressing, and eating. Medicaid does cover long-term care, but only for those with limited income and assets. Therefore, for many, long-term care insurance becomes a critical component of retirement planning, offering a safety net that can help protect retirement savings and ensure that quality care is accessible when needed.

Without long-term care insurance, retirees might find themselves in a difficult situation, where they have to rely on family members for support or spend down their assets to qualify for Medicaid. By having a policy in place, individuals gain the peace of mind knowing they have a plan to cover the costs of long-term care, allowing them to maintain their independence and providing them with more choices for care services.

Average Long-Term Care Insurance Costs at Different Life Stages

Understanding the long-term care insurance cost by age is pivotal when considering this form of insurance as part of a retirement plan. Generally, premiums for long-term care insurance are based on age at the time of purchase, with costs increasing as one gets older. This is because insurers view older applicants as higher risk for needing long-term care services sooner.

For instance, a healthy 50-year-old might pay between $1,500 to $2,500 annually for a long-term care policy, while a 65-year-old purchasing the same policy could see annual premiums climb to $2,500 to $4,000 or more. It’s also noteworthy that premiums are not static; they can, and often do, increase over time as costs of services rise and insurers adjust their rates.

Additionally, the gender of the insured plays a role in determining premiums, with women typically paying more than men due to their longer life expectancy and therefore increased likelihood of needing long-term care. Individual health status and chosen benefits (such as daily benefit amount, length of benefit period, and optional riders) also significantly affect the cost of premiums.

Those who are in their 40s and 50s are often in the best position to buy long-term care insurance, both from a cost and an underwriting perspective. Buying at a younger age can lock in lower premiums and, because underwriting is based on health status, younger applicants are more likely to qualify for coverage. It’s a strategic move for those who are looking to mitigate future financial risks associated with long-term care and preserve their assets for other retirement goals.

Factors Influencing the Cost of Long-Term Care Insurance

A symbolic depiction of long-term care insurance showing a safety net, a piggy bank, healthcare symbols, and an elderly person being comforted, to represent financial security for elder care.

While age is a significant determinant of long-term care insurance cost, several other factors play a crucial role in shaping the premium rates. Health status is a primary consideration; individuals with existing health conditions or a family history of chronic diseases may face higher premium costs. Insurance companies often require medical underwriting, which could include a health questionnaire and potentially a medical exam.

Another factor is the level of coverage desired. Policies can be customized to provide different levels of benefits, which will influence the cost. This includes the daily benefit amount, which is the maximum amount the policy will pay per day for care, and the benefit period, which is how long the policy will pay out for care. Longer benefit periods and higher daily benefits equate to higher premiums.

Additionally, inflation protection is an optional but often recommended feature that ensures the purchasing power of benefits keeps up with the rising cost of care. Opting for inflation protection will increase the premium but can be vital to ensuring that the insurance coverage remains adequate over time.

The elimination period, or the amount of time that must pass before insurance starts to pay for care, also influences the cost. A longer elimination period can reduce the premium, as the insured would be responsible for covering care costs for a longer time before the insurance kicks in.

Lastly, marital status can affect premiums. Some insurers offer discounts to married couples or domestic partners when both purchase long-term care insurance.

When considering long-term care insurance, it’s essential to evaluate these factors carefully to determine the right balance between coverage and cost. Working with a knowledgeable advisor can help individuals navigate these options and tailor a policy to fit their specific needs and financial situation.

Strategies to Afford Long-Term Care Insurance Later in Life

A realistic image of a senior person with a caregiver, representing long-term care insurance.

For those who have not yet secured long-term care insurance and are later in life, there are strategies to make coverage more affordable. One approach is to adjust the policy features. For instance, choosing a longer elimination period, a shorter benefit period, or a lower daily benefit can reduce premiums. It’s important to balance these changes with the potential risk of inadequate coverage though.

Another tactic is to consider a shared care policy if you have a spouse or partner. These policies allow couples to share a pool of benefits, potentially lowering the cost while still providing a safety net.

Looking at hybrid policies that combine long-term care insurance with life insurance can also be advantageous. While they may require a larger upfront investment, they often guarantee benefits whether long-term care is needed or not, providing a death benefit if the long-term care component is unused.

For some, it may be effective to reallocate existing assets to fund long-term care insurance. This could involve using savings, investment income, or even retirement funds to pay premiums, treating insurance as another investment in future financial security.

An often overlooked strategy is to take advantage of tax incentives. Certain long-term care insurance premiums can be deductible as medical expenses, and some states offer tax credits or deductions for purchasing long-term care insurance.

Lastly, seeking professional advice is invaluable. Financial advisors can provide personalized strategies that consider an individual’s entire financial picture, including retirement savings, income, and other assets, to find the most cost-effective way to integrate long-term care insurance into their financial plans.

Comparing Long-Term Care Insurance: Traditional vs. Hybrid Policies

An insurance advisor discussing long-term care insurance with a client in a modern office.

When exploring long-term care insurance options, it’s crucial to understand the differences between traditional and hybrid policies. Traditional long-term care insurance policies function similarly to health insurance, where policyholders pay a recurring premium to cover potential long-term care costs. If care is never needed, the premiums do not get refunded, which can be a sticking point for some individuals.

Conversely, hybrid long-term care policies combine life insurance with long-term care coverage. These policies require a lump sum or scheduled payments over a few years, but offer a death benefit alongside long-term care coverage. If long-term care isn’t utilized, the policy pays out a death benefit to beneficiaries, which can address concerns about ‘wasting’ premiums.

Hybrid policies can be more expensive upfront, but they may provide a sense of financial efficiency and security by ensuring that the money invested will be used, one way or another. On the other hand, traditional policies can offer higher long-term care benefits for lower premiums, albeit without the guarantee of a return on investment.

Each type has its merits, and the choice often depends on individual circumstances, including financial resources, health status, and estate planning goals. Evaluating the long-term care insurance cost by age is also a critical factor in this decision-making process. Engaging with a financial advisor can help delineate these options and guide individuals towards the most suitable policy for their needs.

If you’re looking to catch up with your retirement planning, especially considering the costs of long-term care insurance, we’re here to assist. Schedule Your Free Consultation Now! Our expert Advisors are at the ready to provide personalized guidance to help you achieve your retirement goals. Don’t let uncertainty cloud your future—take control of your finances today.


  • Scott Hall

    Scott realized about 5 years ago that he was woefully behind on retirement savings and needed to catch up. He began writing about it on Assets.net

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