Should You Buy Long-Term Care Insurance?

S.F. Ehrlich Associates |

November 15, 2018

The short answer is “There isn’t one answer for everyone.” The long answer is: “It depends.”

What is it?  Long-term care essentially involves insurance for two risks: assistance within your home, and/or care within a health-care facility (i.e., assisted living or long-term nursing care).

Can I get it? If you have a significant and chronic health condition that might increase your odds of requiring assistance or nursing care at some point in the future, you’re unlikely to qualify for a long-term care policy. (The underwriters who work for insurance companies seek to limit risks, not increase them.)

What does it cost?  Be prepared to pay, and then be prepared to pay more. Many insurance providers exited the long-term care business when they realized they couldn’t make money. (In other words, policyholders didn’t die when they were supposed to die. Instead, they lived and collected their benefits.) The remaining companies routinely hike premiums to assure they’ll have sufficient assets to pay future claims. (NOTE: Unlike car insurance, the insurer who sells you a long-term care policy can’t raise your individual premium if you have a claim. Instead, the company has to raise every policyholder’s premium in a specific rate class, and they need permission from your state insurance commissioner to do so.)

Do I really need it?

  • Limited Net Worth: How much you have factors a lot into whether or not you need long-term care coverage. If your assets are limited and most of your income comes from (or will come from) Social Security, then the answer for you is probably “NO.” The reason is that Medicaid will likely cover all of your needs after you run out of assets.
  • High Net Worth: If you have sufficient assets to pay your current expenses and an additional $100,0002 or so a year, then you may have the financial wherewithal to self-insure. (Remember, for couples, the expense of nursing care or assisted living is in addition to current daily expenditures. If one partner moves into a nursing home, the other partner remains at home. Though there might be some downsizing, there will still be a need to pay for two separate living expenses.)
  • Everyone in between: The dilemma for everyone else is how to pay the increasing costs for long-term care policies, assuming, of course, that you’re eligible to buy one. The answer is to review all of the many coverage options. Even partial coverage may be an adequate supplement to ensure that one partner receives care in a preferred facility should it ever be required.

The prospect of paying more than $100,000 a year for nursing home care can be both frightening as well as overwhelming. Fortunately, most people will never require nursing home care. For many, family, friends, and home health aides will help them get through trying times.



1 Gleckman, Howard. “The Maybe Policy.” Forbes, 16 July, 2012.
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