Long-Term Care Insurance: Is It Actually Worth It?
Long-Term Care Insurance: Is It Actually Worth It? A Straightforward Cost Benefit Breakdown
By The Bold & The Wise Editorial Team Wednesday, April 23, 2026 · 11 min read Categories: Legal, Insurance, Long-Term Care
Seventy percent of Americans who reach age 65 will need some form of long term care during the remainder of their lives. That figure comes from the US Department of Health and Human Services and it is one of the most cited — and most misunderstood — statistics in retirement planning.
The misunderstanding is not the number itself. The number is accurate. The misunderstanding is what people conclude from it. Some read that statistic and immediately conclude they must purchase long term care insurance at any cost. Others read it, dismiss it as alarmism, and refuse to think about it at all.
Both responses are wrong.
Long term care insurance is one of the most important financial decisions you will make in the second half of your life — and also one of the most nuanced. It is genuinely right for some people and genuinely wrong for others, and the difference depends on factors that are specific to your situation, your family, your assets, and your values.
This article is going to walk you through exactly how to think about it. No sales pressure. No false comfort. Just clear information so you can make the right decision for yourself.
First: Understanding What Long Term Care Actually Is
Long term care is not medical care in the traditional sense. It is assistance with what healthcare professionals call activities of daily living — the fundamental tasks of existing as a person. Bathing. Dressing. Using the toilet. Transferring from a bed to a chair. Eating. Managing medications.
It also includes what is called instrumental activities of daily living — the more complex tasks that allow someone to live independently. Preparing meals. Managing money. Shopping for groceries. Taking transportation. Housekeeping.
When a person can no longer perform enough of these tasks on their own they need long term care. That care can be provided in several settings — in their own home by a family member or paid caregiver, in a community based setting like adult day care, in an assisted living facility, or in a nursing home.
Long term care is not covered by regular health insurance. It is not covered by Medicare in any meaningful way. Medicaid covers it only after you have exhausted nearly all of your assets. This is the fundamental problem long term care insurance was designed to solve.
What Long Term Care Actually Costs in 2026
The numbers are sobering. According to Genworth’s most recent Cost of Care Survey:
In Home Care
- Home health aide services: approximately $32 per hour
- Full time in home care (44 hours per week): roughly $6,300 per month
- Round the clock in home care: $20,000 to $25,000 per month
Assisted Living
- Private one bedroom apartment: approximately $5,350 per month on average
- Memory care or specialized units: $7,000 to $10,000 per month
Nursing Home
- Private room: approximately $10,650 per month on average
- Semi private room: approximately $9,700 per month on average
Adult Day Care
- Approximately $2,050 per month
These are national averages. Costs vary significantly by region. The northeast, California, and Hawaii run substantially higher. The midwest and south run somewhat lower.
The average length of time someone needs long term care is about three years. Twenty percent of people who need it, need it for five or more years. This is how you end up with total lifetime costs ranging from $150,000 to well over $500,000.
What Medicare Does and Does Not Cover
This is one of the most widespread misconceptions in American retirement planning so it deserves a clear statement.
Medicare does NOT cover long term care.
Medicare covers short term skilled nursing care — up to 100 days — after a qualifying hospital stay, and only if skilled nursing or rehabilitation is medically necessary. It does not cover custodial care, assisted living, home care for activities of daily living, or any form of extended care.
If you become physically or cognitively unable to care for yourself and need ongoing support, Medicare will not pay for it. Period.
This is why so many families discover the long term care cost problem at the worst possible moment — when a parent has just been discharged from the hospital and suddenly needs care that no one anticipated paying for.
How Long Term Care Insurance Actually Works
Long term care insurance is a contract between you and an insurance company. You pay annual premiums, typically for many years. In exchange, if you eventually need long term care that meets the policy’s triggering conditions, the insurance company pays a daily or monthly benefit for the duration specified in your policy up to a maximum lifetime benefit.
Typical benefit structure:
- Daily benefit of $150 to $300 per day ($4,500 to $9,000 per month)
- Benefit period of 3 to 5 years or lifetime
- Elimination period — the waiting period before benefits begin — typically 90 days
- Inflation protection rider — typically 3 to 5 percent compound annually
What triggers benefits: Most policies pay benefits when you either cannot perform at least two of six activities of daily living without substantial assistance, or have a severe cognitive impairment like Alzheimer’s disease.
What long term care insurance costs: This is where the calculation gets difficult. Premiums vary enormously based on your age, health, gender, location, and the specific policy features you select. Some approximate figures:
- Age 55 purchase: $900 to $2,100 per year for an individual
- Age 60 purchase: $1,200 to $3,100 per year
- Age 65 purchase: $1,900 to $4,500 per year
- Age 70 purchase: $3,500 to $8,000 per year
Women pay 30 to 50 percent more than men because they live longer and require care more frequently. Couples who purchase policies together typically get a discount of 15 to 30 percent.
Here is the critical thing to understand: these premiums can and often do increase over time. Insurance companies can raise premiums on entire blocks of policyholders with state regulatory approval. Many people who purchased policies in the 1990s and early 2000s have seen premium increases of 50 to 100 percent or more over the life of their policies.
Who Should Actually Consider Long Term Care Insurance
Long term care insurance is not right for everyone. It is right for a specific type of person with a specific financial situation.
You should consider long term care insurance if:
Your total assets are between approximately $500,000 and $2 million — not counting your primary residence. People with less than this typically cannot afford sustained premium payments and will qualify for Medicaid relatively quickly if they need care. People with more than this can typically self insure — pay for care out of their own assets without running out.
You have a family history of conditions requiring extended care such as Alzheimer’s, Parkinson’s, or stroke. Genetic predisposition genuinely matters here.
You want to preserve assets for your spouse, children, or grandchildren. Long term care can consume an entire estate. Insurance protects your legacy.
You value independence and want control over where and how you receive care. Medicaid covered care typically means a nursing home and a limited set of facilities that accept Medicaid. Insurance gives you options.
You can afford the premiums without straining your budget — ideally paying no more than 5 percent of your pre tax retirement income toward long term care insurance premiums.
You should probably NOT purchase long term care insurance if:
Your assets are under $300,000 to $400,000. You likely cannot afford sustained premiums and will qualify for Medicaid if needed.
Your assets are over $3 million. You can self insure and likely come out ahead financially.
You are already in poor health and would not qualify for a good policy at reasonable rates.
You are over 75 when considering purchase. Premiums become prohibitive and eligibility restrictive.
You have a strong family support system willing and able to provide care. Family caregiving is not free — it has real costs including career impact and caregiver burnout — but it does reduce the need for paid care.
Alternatives to Traditional Long Term Care Insurance
The traditional long term care insurance market has contracted dramatically over the past two decades. Many insurers have exited the market entirely. Those remaining have tightened underwriting and raised prices. This has led to several alternative approaches worth understanding.
Hybrid Life Insurance and Long Term Care Policies These are life insurance policies with a long term care rider — if you need long term care, the policy pays out an accelerated death benefit to cover costs. If you never need long term care, your beneficiaries receive the full death benefit when you die. These have become increasingly popular because they address the biggest objection to traditional long term care insurance — that you pay premiums for decades and get nothing back if you never need care.
Typical cost: $80,000 to $150,000 in total premium, often paid as a single premium or over 10 years. Provides a death benefit of $150,000 to $300,000 and long term care coverage of two to three times the death benefit.
Annuities with Long Term Care Riders Similar concept but structured as an annuity. You deposit a lump sum and receive either retirement income or accelerated payouts for long term care.
Self Insurance For high net worth individuals, setting aside a dedicated long term care fund in conservative investments is often more efficient than insurance. A $500,000 account earning modest returns can fund roughly five years of high quality care.
Medicaid Planning For people with lower assets, working with an elder law attorney to structure assets in a way that preserves some for a surviving spouse while qualifying for Medicaid long term care benefits is often the right approach. This must be done at least five years before you need care due to Medicaid’s look back period.
What to Look for in a Policy If You Do Buy One
If you have decided long term care insurance is right for you, here is what matters.
Financial strength of the insurance company. You need to be certain the company will still exist in 30 years when you might file a claim. Look for A.M. Best ratings of A++ or A+, Standard & Poor’s ratings of AA- or better, and Moody’s ratings of Aa3 or better.
Inflation protection. A $150 per day benefit today will be grossly inadequate in 20 years. Insist on 3 to 5 percent compound inflation protection even though it increases premium costs.
Benefit period and pool of money structure. Many modern policies use a pool of money structure where your total benefits can be spread across any number of years until exhausted. This is more flexible than rigid benefit periods.
Home care benefits equal to facility benefits. Older policies often paid less for home care than facility care. Most people want to age at home. Make sure your policy supports that.
Waiting period. A 90 day elimination period is standard and keeps premiums reasonable. Longer waiting periods save money but require more self funding at the beginning of care.
Couples discount. If married, always apply together for a substantial discount.
The Conversation You Need to Have
Long term care is often talked about as an individual decision. It is not. It is a family decision — and the family members who will ultimately be affected need to be part of it.
If you become unable to care for yourself who do you want making decisions? Who do you want providing or overseeing your care? What quality of life do you want? Where do you want to be? These are questions that deserve real conversations with your spouse, your adult children, and potentially your siblings.
Many families discover through these conversations that assumptions they held about one another were wrong. Parents sometimes assume their adult children will provide care. Adult children sometimes assume their parents have long term care insurance when they do not. These assumptions lead to painful surprises.
Have the conversation while everyone is healthy and capable. Put decisions in writing. Make sure your long term care plan is consistent with the rest of your estate plan — your will, your healthcare directives, your power of attorney.
The Bottom Line
Long term care insurance is neither the absolute necessity some advisors make it out to be nor the wasteful expense its critics claim. It is a legitimate financial tool that solves a legitimate problem for a specific subset of people.
The question is not whether long term care insurance is good or bad. The question is whether it is right for you, your finances, your family, and your values.
Work through the numbers honestly. Consult a fee only financial advisor — not a commissioned insurance salesperson — who can evaluate your situation objectively. And have the family conversations that need to happen regardless of what you ultimately decide.
That is what bold and wise looks like.
Next Wednesday on The Bold & The Wise: Choosing the Right Executor for Your Estate — Why This Decision Matters More Than Most People Realize and How to Get It Right.
Resources Mentioned in This Article
- American Association for Long Term Care Insurance: aaltci.org
- National Academy of Elder Law Attorneys: naela.org
- Genworth Cost of Care Survey: genworth.com/costofcare
- Medicare.gov long term care information: medicare.gov
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