When planning for retirement, most of us focus on saving enough money to replace the income lost when we stop working. We want a “nest egg” to help fund the daily expenses of living—like groceries, utilities, and gas—as well as discretionary income that allows us to enjoy our well-earned freedom.

Life, however, is unpredictable. You may be healthy and independent now—but what happens if you one day need assistance with daily living tasks? You’ll likely require some form of long-term care, whether it’s provided in your home or a facility. Long-term care insurance is designed to address the uncertainty of future care costs and help boost your financial well-being as you move into your retirement years.

When it comes to long-term care insurance, one question people usually have is: Can I afford it? Or: What's the cost of long-term care insurance? Let’s explore this topic, starting with a look at the real costs of long-term care in America.

How much does long-term care cost (without insurance)?

Long-term care expenses vary widely based on the location, care setting, and level of care provided, but they can be substantial. Below are 2023 average monthly costs for three U.S. cities, based on the Genworth Cost of Care Survey.¹

 

It may surprise you to learn that private health insurance does not pay for long-term care. This includes Medicare, which only covers short-term stays in a skilled nursing facility. You may be able to get help from Medicaid, but only once you “spend down" the bulk of your savings. Medicaid coverage is also limited to approved nursing homes.

If you want to protect your assets and have more choices in where and how you receive care, long-term care insurance offers a way forward.

What is the cost of long-term care insurance?

How much is long-term care insurance? According to the 2024 American Association for Long-Term Care Insurance (AALTCI) annual Price Index survey, the average annual premium for a $165,000-benefit policy with no inflation protection is $950 for a single male (age 55) and $1,500 for a single female (age 55). For a couple where both are age 55, the average combined annual premium is $2,080. 

When the same long-term care insurance policy is purchased at age 60, premiums rise. The average annual premium for a single male is $1,200 and $1,900 for a single female. Couples can expect to pay around $2,600 for a combined yearly premium.²

In the Nationwide Retirement Institute Long-Term Care Survey of adults age 28+, nearly half of respondents cited cost as a reason for not buying this type of policy. Their perspective changed when they saw a sample of a policy with a $130 per month cost—and 40% said they would reconsider their decision.³

“There’s a common misconception that long-term care insurance is expensive,” said Holly Snyder, president of Nationwide’s Life Insurance business. “However, perspective is important."

You can secure a long-term care policy for as little as a few hundred dollars a month, compared to the several thousand you'd pay for care out of pocket,” Snyder said.

What factors affect the cost of long-term care insurance?

Pricing for long-term care insurance varies. Below are some factors that impact how much you’ll pay for a policy:

• Age, health, and gender: People who are younger and healthier typically pay less for long-term care insurance premiums. As age increases, the cost of insurance rises. That’s why the best age to buy long-term care insurance is in your mid-50s, according to AALTCI. In addition, women often pay higher premiums than men. This is because statistically, they tend to live longer and are more likely to need long-term care.
• Marital status: Some insurers offer premium discounts for married couples or partners who buy policies together.
• Type of policy: Traditional long-term care insurance policies may be priced differently than hybrid policies (which combine long-term care benefits with life insurance).
• Coverage amount and duration: Premiums increase with more comprehensive coverages (e.g., higher daily or monthly benefits) and a longer benefit period.
• Elimination period: This refers to the waiting period before benefits kick in. Elimination period options typically range from 0 to 365 days, with lower premiums for longer periods.
• Inflation protection: Adding inflation protection to your policy ensures that benefits keep pace with rising care costs, but it also increases the monthly premium.
• Location: The cost of care varies by region, and insurance premiums often reflect these regional differences.
• Riders and additional features: Optional policy features, such as shared care benefits, return of premium, or nonforfeiture benefits, can add to the overall cost.

Where do I buy long-term care insurance?

You can purchase a policy directly from a licensed insurance agent, broker, or financial planner. If you’re working, your employer might offer the option to purchase this type of coverage.

If your state offers one, you may also be able to get long-term care insurance through a state partnership program. These programs allow you to purchase a shorter-term policy. Then, if you exhaust your benefits, you can potentially qualify for Medicaid assistance and still protect a portion of your assets.  

How do I choose the right long-term care insurance policy?

Choosing the right long-term care policy boils down to several key steps:

1. Evaluate your needs: Consider your current health, family health history, and the likelihood of needing long-term care. You may assume you’ll be able to rely on family for care as you age—but are they capable and willing to provide the necessary care? Caregiving can be physically, emotionally, and financially demanding. In the Nationwide survey, more than 2 in 5 respondents were concerned about becoming a burden to their family as they get older.³
2. Evaluate coverage options: Look at the range of services and care settings covered by different policies. Consider the types of care you might prefer, such as in-home care or assisted living. Make sure a policy covers the services you’re most likely to need.
3. Understand costs and benefits: Compare the premiums, benefit amounts, and benefit periods of different long-term care policies. Look at options that offer inflation protection to ensure your benefits will keep pace with the rising costs of long-term care. A hybrid (linked-benefit) policy with inflation protection has a guaranteed premium, meaning your premium will not change—even as your benefit increases.
4. Get multiple quotes: Long-term care insurance prices can vary greatly. If you're working with a financial advisor, they can help you find the policy options that work best for your budget and needs. You can also reach out to your state's insurance department to ask for a list of long-term care insurance providers in your area.
5. Check insurers’ financial strength: When you do find a policy that interests you, research the insurance company's financial stability and reputation. Check ratings from independent agencies like Moody's or A.M. Best to ensure they are able to pay future claims. Look at the company’s rate increase history as well, since your rates can go up at any time down the road.
6. Review policy features: Look for important features such as elimination periods (waiting periods before benefits begin), renewal guarantees, and nonforfeiture benefits, which guarantee you receive some value if you cancel your policy.
7. Read the fine print: As you would with any insurance policy, carefully read through the policy documents to make sure you fully understand all terms, conditions, and exclusions.

Is long-term care insurance worth it? Seek professional guidance to find out.

A certified financial professional can provide personalized recommendations for long-term care insurance based on your financial situation and care preferences. If you already work with an advisor, don’t hesitate to get the conversation started (30% of Nationwide respondents reported their financial professional has not brought up long-term care as a planning topic3).

Smart planning now will help ensure you can age well—with the security you need and deserve. Making long-term care part of your larger financial strategy just may be one of the wisest moves you ever make.

Many companies offer comprehensive guides to understanding long-term care insurance, including this one from Nationwide. 

Sources

1. Genworth Cost of Care Survey. Found on the internet at https://www.genworth.com/aging-and-you/finances/cost-of-care

2. American Association for Long-Term Care Insurance (AALTCI). 2024 AALTCI Annual Price Index Survey. Found on the internet at https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2024.php

3. Nationwide Long-Term Care Survey (PPT). April 2024.