As we get older, planning for the future isn’t just about retirement savings and travel dreams — it’s also about preparing for the unexpected. One of the most overlooked aspects of financial planning is long-term care. If you’ve never heard of long-term care insurance (LTCI) or aren’t sure how it works, you’re not alone. But understanding this type of coverage can make a world of difference for your finances — and your peace of mind.
What Is Long-Term Care?
Long-term care refers to a range of services designed to help people with chronic illnesses, disabilities, or cognitive impairments such as dementia. These services aren’t medical treatments, but rather help with activities of daily living (ADLs), such as:
- Bathing
- Dressing
- Eating
- Using the bathroom
- Getting in and out of bed or a chair
Long-term care can be provided in a variety of settings, including:
- Your home (through a home health aide)
- Assisted living facilities
- Nursing homes
- Adult day care centers
So, What Is Long-Term Care Insurance?
Long-term care insurance is a policy that helps cover the costs of these services when you can no longer manage daily tasks on your own. Unlike health insurance or Medicare, LTCI is specifically designed to pay for extended care over months or even years.
Here’s how it works:
- You choose the amount of coverage you want — such as a daily benefit amount and how long it should last (e.g., 2 years, 5 years, or more).
- If you develop a condition that requires long-term care and you meet your policy’s criteria, the insurance company will begin paying benefits, often after a short waiting period.
Why Should You Care About Long-Term Care Insurance?
Let’s face it — none of us likes to think about needing help someday. But the numbers tell a different story.
- 7 in 10 people over age 65 will require some form of long-term care during their lifetime.
- The average annual cost of a private room in a nursing home is over $100,000, and even part-time in-home care can add up quickly.
- Medicare typically does not cover long-term care beyond short-term rehabilitative stays.
Without insurance, those costs can quickly drain retirement savings or force difficult decisions on your family. LTCI gives you:
- Financial protection from high out-of-pocket expenses
- Choice and control over the type and setting of your care
- Relief for loved ones who might otherwise have to provide care or manage your finances
A Smart Move for Your Future
Long-term care insurance isn’t for everyone, and it’s not a one-size-fits-all solution. But if you’re in your 50s or 60s and want to plan ahead for your future — while protecting your assets and easing the burden on your family — it’s worth a closer look.
In our next post, we’ll explore what happens when you don’t have long-term care insurance — and how the costs of care can impact your financial plans.
Sources
- “7 in 10 people over age 65 will require some form of long-term care”
U.S. Department of Health and Human Services, Administration for Community Living – “How Much Care Will You Need?”
https://acl.gov/ltc/basic-needs/how-much-care-will-you-need - “Average annual cost of a private room in a nursing home is over $100,000”
Genworth Financial – Cost of Care Survey 2023
https://www.genworth.com/aging-and-you/finances/cost-of-care.html - “Medicare typically does not cover long-term care”
Medicare.gov – What’s not covered by Part A & Part B?
https://www.medicare.gov/what-medicare-covers/whats-not-covered-by-part-a-part-b
