Best Long-Term Care Insurance

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Contributor, Benzinga
May 6, 2021
verified by Jesse Slome

Over half of all 65-year-olds will need long-term care at some point during their lifetimes. Long-term care needs often last up to two years or longer and costs often approach six figures annually, so long-term care can be a significant expense — the type of expense that drains your savings if you’re not covered.

You or someone around you may need long-term care following a serious illness or due to chronic illnesses and conditions. Most often, the need develops gradually simply as a result of aging. Costs for services covered by long-term care insurance, such as at-home or in-patient nursing care, assisted living and occupational therapy and rehabilitation, have seen a steady increase over recent years.

Luckily, consumers today have multiple options of available insurance coverage, such as traditional health-based policies. Some life insurance providers now offer a hybrid policy that provides both a death benefit and living benefits that can be used to cover long-term care needs. You won’t find long-term care benefits with an inexpensive term life policy, but a whole life or universal life policy can be structured as a hybrid and serve as part of a comprehensive estate planning strategy.

Best Long-Term Care Insurance Companies:

What is Long-Term Care Insurance?

Long-term care refers to a broad range of services designed to meet a person's health or personal care needs. Services might include in-home care, nursing home care, hospice care or qualifying care in assisted living facilities. Homemaker services and personal care services are also covered.

Medicare helps cover the cost of many medical expenses but does not generally cover long-term care expenses if custodial care or daily assistance is the only care you need. Coverage is outlined in the Medicare and You Handbook sent each year to seniors who participate in the program.

Who Needs Long-Term Care Insurance?

Middle class households are the most vulnerable to the costs of long-term care and could benefit the most from long-term care insurance. Without coverage, a lengthy long-term care stay could force the liquidation of savings and investments or even the sale of your home.

Medicaid can assist with the cost of long-term care services. However, you must meet financial litmus tests to qualify and assets, including savings, stocks and bonds, vehicles, real estate and home equity generally need to be liquidated before Medicaid becomes an option. Medicaid can provide coverage in many cases of low-income households who don’t have significant assets or home equity.

If you have significant assets that can fund up to $100,000 per year for up to three or more years, long-term care insurance is optional, but be aware of the potential costs of care as you plan for retirement.

How Does Long-Term Care Insurance Work?

Long-term insurance policies help cover the cost of care from approved services or facilities if you are unable to perform two or more of the daily living activities:

  • Eating
  • Bathing
  • Dressing
  • Toileting
  • Transferring (moving into or out of a chair or bed)
  • Maintaining continence

Additionally, long-term care policies cover claims due to Alzheimer’s disease or cognitive disability.

Which Factors Affect Long-Term Care Insurance Cost?

A number of factors can affect the cost of your policy. Some you can't control, like your age or where you live. Others are actionable or based on the policy benefits and additional options you choose.

Age: Rates are lower when you're younger and in good health. While this may mean you pay premiums for a longer time period, you usually benefit from a much more affordable premium that's easier to sustain after retirement when income is limited.

By contrast, waiting until later in life can result in higher premiums based on higher risk and the shorter period of time before commencement of benefits is anticipated. It should be noted, however, that rates are not guaranteed and can increase even if you bought your policy when you were younger.

Health: Much like life insurance, long-term care insurance rates are affected by your health and medical history. An applicant in good health can expect a lower premium than an applicant with several health conditions, assuming all other factors are equal. Once an insurer designates you as Preferred or Select health, they can not change your status even when your health changes.

Policy Length: Today, long-term care insurance is generally designed to pay a maximum benefit. The coverage chosen by most buyers (beginning with the first claim) typically ranges from one to five years. Lifetime or unlimited options, once the most common plan feature, can still be found but comes with higher premiums.

Waiting Period: Many policies don’t provide coverage from day one for skilled care in a nursing facility. A waiting period (also called an elimination period) of 90 days or 120 days is common. However, many policies offer no elimination period for home care benefits.

Any expenses you incur during this waiting period aren’t covered. In effect, the waiting period works like a deductible in other types of insurance. Expect lower premiums for policies with a longer waiting period.

Interest Rates: Long-term care premiums are invested in safe investments before the reserves are used to pay claims. When these investments provide a lower return, higher premiums are charged to the consumer.

Policy Coverage Limits: As you might expect, a policy with a higher coverage limit or a higher daily coverage limit commands a higher premium than a basic policy that may create more financial exposure.

Inflation Protection: This is an option most experts recommend be included with your coverage. What seemed like a reasonable coverage limit when the policy was purchased may not be enough to cover the rising costs of long-term care needs in the future.

A policy with inflation protection provides a better safeguard — but at a cost. Options range from 1% to 5%. A 3% option will generally double the base cost of coverage. The 5% option will tripe the base policy premium cost.

Discounts: You may qualify for a discount if you buy more than one policy. Many insurers offer discounts of up to 30% if a couple purchases coverage together. Some will offer a partial discount if only one of the spouses or partners qualifies for coverage.

How Do Hybrid Life Insurance or Long-Term Care Insurance Policies Work?

While there are fewer companies writing long-term care insurance policies now, life insurers have entered the fray with a hybrid product that combines permanent life insurance with long-term care coverage. These hybrid policies make the death benefit or a portion of it available for some long-term care needs. The idea isn't entirely new. Many life insurance policies have made accelerated death benefits available for some time to address the costs associated with critical illness.

Notably, hybrid life insurance policies with a long-term care rider don’t have a waiting period and can feature fixed premiums, whereas a dedicated long-term care insurance policy can become more expensive over time.

Additionally, if you never need the long-term care coverage, your policy works as a permanent life insurance policy and provides a death benefit for your beneficiaries. By contrast, with a long-term care insurance policy, if you never need long-term care, the insurer keeps the premiums you’ve paid and you get no benefit.

One limitation of hybrid life insurance policies is that the IRS limits the amount of the policy’s death benefit that you’ll have available for long-term care expenses each month.

Another product with a similar goal combines an annuity with a long-term care rider.

How Much Long-Term Care Insurance Do I Need?

You don’t necessarily need to purchase a large amount of coverage if you have significant savings. Some households choose a lower coverage amount expecting to cover some of the costs out-of-pocket if long-term care is needed. Here are some quick facts:

  • The median cost of a private nursing home room is nearly $100,000 per year, and some states, like Connecticut, average nearly $150,000 per year. Texas is less expensive, at under $80,000 per year for a private room.
  • A semiprivate room doesn’t cost much less than a private room, and the national median annual cost comes in around $85,000.
  • The average length of years men will require long-term care is 1.5 years, while the average is 2.5 years for women.
  • You can expect an annual cost of up to $100,000 per year for a length of about two years, on average, or about $200,000.

What to Look for in Long-Term Care Insurance

There are fewer long-term care insurers than in the past, which suggests that caution is important. You’ll want to choose an insurance provider that is financially strong and will be there when you need to make a claim.

Available options are also a strong consideration. There are a lot of adjustments you can make to a policy to make it more affordable, but some choices can work against your best interest, like choosing a policy with only one year of coverage or a one-year waiting period. Long-term care needs that extend beyond one year last an average of over four years.

Unless you’re in a strong cash or income position, these limitations can create a massive coverage gap. Look for a company that offers options to cover your financial exposure.

Also consider companies that offer a waiver of premium, which eliminates ongoing premium payments once a claim is approved. A “shared care” rider is another attractive option because it allows you to pool coverage for two people. If benefits from one of the individuals insured run out, the remaining pooled benefits are still available.

Best Long-Term Care Insurance Companies

Priorities vary by household. You may look more closely at affordability, while others may prioritize coverage length. Fortunately, there are some great options to meet your most important goals.

Mutual of Omaha Health Insurance
Best For
  • Medigap
securely through Mutual of Omaha Health Insurance's website

1. Best for Options: Mutual of Omaha

You’re the boss with a Mutual of Omaha long-term care insurance policy. Design a policy to meet your needs with a wider choice of options than many competitors. If you want fixed-term coverage, the option is available — or you can choose a pool of money that allows you to use the money as needed and with fewer restrictions.

You’ll also find a wider choice of caregivers, and independent home caregivers are covered as well.

Because Mutual of Omaha has so many options for customizing coverage, the learning curve can be a bit steeper than with some simpler policies. Ask questions or discuss your options with a trusted advisor.

New York Life – Health Insurance
Best For
  • Backing From a Storied Insurance Carrier

2. Best for Length of Coverage: New York Life

While some long-term care insurance policies only provide coverage for as short as a year, New York Life raises the bar to seven years for coverage. A maximum daily benefit of $400 per day, choosing New York Life means you can avoid cutting services or making painful choices. Elimination periods of as low as 90 days help protect your savings by limiting your out-of-pocket expense during the early part of care.

Inflation protection of up to 5% also protects your coverage. Health care and long-term care costs tend to increase faster than overall inflation, which makes it wise to build in coverage limit increases.

Mass Mutual Health Insurance
Best For
  • Range of Insurance Products

3. Best for Caregiver Choice: MassMutual

The CareChoice policy provides a benefit whether you need long term care, never need care, or if you decide to cancel the coverage and receive the surrender value.

Policy owners are also eligible to receive dividends which can be an excellent way to control future costs especially during retirement years. While not guaranteed, MassMutual has paid policy dividends to eligible participating policyowners every year since 1869.

Guardian Health Insurance
Best For
  • Guaranteed Renewability

4. Best Long-Term Care Rider: Guardian

It makes sense to consider other options as well, like life insurance or annuities with a long-term care rider. Guardian offers both whole life insurance policies and universal life insurance policies with a long-term care rider that’s designed to offer flexibility and independence. If you never need coverage, the death benefit for the life insurance policy passes on to your beneficiaries.

5. Best Way to Find Independent Long-Term Care Insurance Agents

Long-term care insurance can be a complicated product to evaluate.  It can be important to compare both traditional and hybrid options.  Each has their positive and negative features.

The American Association for Long-Term Care Insurance can help connect you with an independent specialist able to explain your options and offer you coverage from multiple leading insurance companies.

Final Thoughts

Long-term care insurance costs are nearly impossible to predict. Consider your options carefully with an eye on affordability. A short term cash crunch can put your policy in jeopardy and it may not be possible to replace the policy later in life. As always, ask questions and be sure you understand the coverage before you make a purchase.

Frequently Asked Questions


1) Q: Is health insurance required?


The federal mandate that required health insurance has been lifted but some states have enacted state-level mandates that require residents to have health insurance. Even where not required, health insurance can protect your family against catastrophic healthcare costs and help make routine medical expenses more predictable. Get your most affordable quote through our top providers today.


2) Q: What does health insurance cover?


Most health insurance plans provide the 10 essential health benefits that were part of Obamacare requirements. Coverages include preventive and wellness services, prescription drug coverage, emergency services, ambulatory services, lab services, pediatric services, and more. Many plans cover a wider range of healthcare expenses but may cost more than basic plans or may have higher out-of-pocket costs for some services.Get a custom health insurance quote to cover you and your family today.


3) Q: How can I save money on health insurance?


For healthcare plans that comply with the Affordable Care Act, only a handful of rating factors affect your premium. These include age and location, at least one of which can’t be changed. Smokers will pay more in most cases and your choice of plan level can affect premiums as well. Choosing a high deductible health insurance plan can reduce the cost of premiums. These plans can be combined with a health savings account to take advantage of tax-free savings for healthcare expenses. Get the cheapest health insurance premium from top providers.