Here's Who Actually Needs Long-Term Care Insurance — and When to Buy It

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Most people will need some form of long-term care as they age. Planning for that care is one of the biggest challenges older Americans face.

Enter long-term care insurance, which helps cover the costs of extended medical care whether at you’re home, or in a nursing home or adult day care. Long-term care insurance policies can be helpful but pricey, and if you wait too long to buy, your premiums will be sky-high. And that’s if you’re able to take out a policy at all.

The sweet spot to take out a long-term care insurance policy is between your mid-50s and mid-60s, experts say. At that point, you’ll still be healthy enough to qualify for comparatively low policy premiums but old enough you probably won’t be paying into the insurance plan for longer than you need to.

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Who actually needs to buy long-term care insurance?

If you live a long life, the chances of needing long-term care are increasingly high, says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

“At age 90, you just can’t do the things you did at age 60 or 70,” he says. Long-term care involves someone helping an older adult manage those tasks — officially called “activities of daily living” — including grocery shopping, preparing and eating food, bathing, getting out of bed and getting dressed.

Often, this comes at a cost. As many as 70% of Americans over age 65 will require some kind of long-term care, and 48% end up paying for that care, according to the U.S. Department of Health and Human Services. Contrary to what many think, Medicare does not cover any long-term care expenses. (Medicaid often does if you meet the income requirements, though it won’t kick in until you’ve paid what you can out of pocket.)

Just because you’ll need some form of long-term care doesn’t necessarily mean you should pony up for a long-term care insurance policy. Instead, some people may intend to rely on spouses or other family members as unpaid caregivers.

In particular, wealthier people who have significant assets are likely better off planning to pay for their medical needs out-of-pocket, says R. Tamara Konetzka, a professor at the University of Chicago who specializes in health economics and long-term care.

Lower-income folks, on the other hand, might struggle to afford the premiums tied to long-term care insurance, and they probably won’t have the savings built up to cover all their needs down the road either. In that case, they’d probably be better off exhausting any savings they have and then relying on Medicaid should they end up needing paid long-term care services.

That leaves middle-income Americans who have a decent amount of retirement savings as the ideal audience for long-term care insurance.

“The product really appeals to middle income, older adults who really value risk aversion and don't want to, let's say, burden their kids with care or for paying for care,” Konetzka says. “They just want to have all their ducks in a row.”

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When should you buy long-term care insurance?

One of the most common calls Slome says he gets at the association is from adult children asking about insurance that can help pay for a parent who’s looking at nursing homes or already using an in-home aide. And each time, he has to tell them they’re too late: Once you already need care, you won’t be able to buy a plan anymore.

“You can’t buy car insurance after you've had a car accident,” he says. “It’s not the way insurance works.” Instead, he adds, you have to buy when you’re still young and healthy enough to qualify.

That’s why he says the latest most people want to wait to purchase a policy is 65. At that age, you qualify for Medicare. On the bright side, that means you can take advantage of free medical exams. The downside, when it comes to long-term care coverage, is that those exams could ultimately uncover health conditions that may drive up the price of your policy.

Most insurers require you to answer questions about your medical history before taking out a plan; some may even require medical records. And the companies know what health conditions and medications to watch for, Slome says.

In fact, the denial rate for policies increases to 38% for people who are ages 65 to 69, up from 30% for people ages 60 to 64, according to the long-term care association. The denial rate jumps even higher for those in the 70 to 74 age bracket, to 47%.

Not only are your chances of denial lower if you purchase earlier, but you’ll pay less, too. Premiums depend on a variety of factors, including your age, gender, marital status, medical history and the inflation protection you choose. Here’s a breakdown of typical costs for a plan with $165,000 in benefits, meaning that’s the maximum amount the insurance company will pay out. (Benefit levels are usually capped at a certain amount per day or month, with a lifetime maximum.)

Typical annual premiums for long-term care insurance policies with a $165,000 benefit level

Purchase age

Single male

Single female

Couple

55 years old

$1,750

$2,800

$3,875

60 years old

$2,060

$3,325

$4,500

65 years old

$2,600

$4,230

$5,815

Source: American Association of Long-Term Care Insurance. Pricing assumes a 2% annual inflation adjustment to the maximum benefit payout.

Tips for buying long-term care insurance

Unlike some other types of insurance, you typically only buy long-term care insurance once. As long as you keep paying your premiums, the company can’t drop you.

“It really pays to talk to someone who knows what they’re doing,” Slome says. (The association Slome works for doesn’t directly sell insurance, but you can call it to talk with a specialist in the field.)

There are several policy types that fall into two broad categories. The first includes stand-alone, traditional long-term care policies; the second includes linked policies that are paired with other products, like life insurance. Prices and discounts vary between insurers, and benefits do, too.

Dick Weber, who offers fee-only insurance advising, agrees it’s critical to find a broker who knows the field. While there’s no single certification you can look for to determine expertise, he recommends asking agents you’re considering how long they’ve been a licensed insurance agent, what steps they’ve taken to specialize in long-term care and what professional designations or certifications they have.

You should also ask them whether they are considered a fiduciary to you and your insurance needs, which means their primary responsibility is offering advice that benefits you — not selling you plans that earn them kickbacks.

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