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How Much Should I Pay for Long-Term Care Insurance?

As you grow older, your risk of requiring long-term care services increases. Unfortunately, these services are not usually covered by traditional health insurance or even Medicare, leaving thousands of elderly individuals vulnerable to paying extensive long-term care costs during retirement.

One way to protect yourself against overwhelming out-of-pocket costs for care is by purchasing a long-term care insurance plan. This insurance can significantly reduce medical bills should you become unable to care for yourself. However, long-term care insurance doesn’t come cheap.

What is long-term care insurance?

Before we dive into the costs of long-term care insurance, you should have a firm idea of what it is and if you will even need it.

Long-term care insurance is designed to cover the costs of long-term care services in your home, a care facility or living community. Long-term care insurance differs from traditional health insurance because health insurance is not designed to support care services for extended periods of time. These insurance plans typically allot a maximum daily benefit that can go toward paying a caregiver to assist you with daily activities such as bathing, dressing or eating.

You may need long-term care services once you reach a certain age, or even sooner, should an accident or illness occur. Long-term care costs can add up quickly, costing you thousands of dollars each year, depending on the type and location of the care you receive. This can become extremely difficult for the average retiree to handle, especially while living on a fixed income. If you aren’t prepared, these costs of care can easily wipe out your retirement savings in as little as a few years.

If you anticipate needing in-home or assisted living care as you age, buying long-term care insurance may be a good idea for you.

How much should you expect to pay?

There is no set cost of long-term care insurance because every plan from every insurance provider will differ. The cost of your long-term care insurance plan will ultimately depend on a few factors, including your age when you purchase the policy, the maximum daily benefit, the number of years the policy covers and any additional benefits you add, such as inflation features.

Most long-term care insurance rates can range between $1,500 and $6,000 per year, depending on the above-mentioned factors. Planning ahead can help minimize your long-term care insurance premium. The rates tend to be lower when you purchase at an earlier age.

How much you, specifically, should pay for insurance will largely depend on your health, your needs and your financial stability.

The majority of peoples’ long-term care needs can be met with a benefit period lasting between three and five years. Knowing this, most people can get by on purchasing a moderate benefit package instead of one that will last significantly longer than it will be needed. However, if you have a family history of illnesses like Alzheimer’s, you may want to purchase a plan that provides greater benefits, which will be more expensive.

If your retirement savings is not quite where it should be, you may want to spend less on long-term care insurance and focus on saving. Plus, you want to make sure you are able to pay your premium year-after-year and into retirement.

Choosing a long-term care insurance plan can seem daunting, but not if you have the right guidance and information. Speak with a financial and retirement advisor to learn about your options and discover the right plan for your financial future.


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