You may be surprised that a whopping 52% of people over the age of 65 will eventually need some form of long-term care (LTC). But many are not even aware that long-term care insurance is a thing.
Well, we are here to tell you: it is. LTC insurance helps to cover expenses that are not usually covered by medical insurance like Medicaid, and Medicare. It can cover the financial burden of disability or long-term illness, and costs related to traditional long-term care such as assisted living facilities, nursing home care, or at-home care.
Take a look at the current prices of these services and how they have increased over the last few years:
- Personal care assistant services: $4,290 (helps with tasks like cooking and running errands)
- Home health aide: $4,385
- Adult day health care: $1,625
- Assisted living facility: $3,051
- Semi-private room in nursing home: $7,513
- Private room in nursing home: $8,517 (up from $7,698/month)
These costs are staggering compared to what you are probably currently paying for your mortgage. Do not fear, though. We’ve got your back. We put together a guide to help ease your worries by explaining what LTC insurance looks like, and how to choose a policy. We’re also sharing a list of five of the top LTC insurance providers to help you or your loved ones get the care you need so you’re not paying out of pocket.
How Long-Term Care Insurance Works
While insurance will cover a lot of your expenses, most policies will have limits. There’s usually a maximum daily benefit payout or a cap on the amount paid throughout the lifetime of the plan. If you end up needing help beyond those limits, you’re left in a tricky position without coverage. You’ll want to focus your search on policies with long benefit periods.
There will also be eligibility criteria for an insurance company to pay out for long-term care benefits. For example, if you are diagnosed with a certain illness or can’t perform day-to-day activities such as eating, getting dressed, bathing, or getting out of bed, you will likely be approved for claims. Bear in mind, the provider will usually do their own evaluation before approving a claim so you may have to wait for that.
Note: Most providers have an elimination period. The elimination period is the length of time between when you start needing LTC and when you will receive benefit payments from your insurer. You might also see this called the “waiting” or “qualifying period.” During this time, you will need to pay for LTC services yourself before your insurance kicks in to reimburse you. For most providers, this is 30, 60, or 90 days before you can get your monthly benefit. Generally, policies with a shorter elimination period will have more expensive premiums, but it could save you money when you need LTC.
How to Choose The Best Long Term Care Insurance
We know that there’s a lot to think about before purchasing LTC insurance. Not all policies are created equally and different people have different needs, budgets, and health concerns. To narrow the search, here are some things to consider before choosing a provider:
Before taking a deep dive into comparing different providers and policies, be sure to check availability first. For example, some providers will only offer certain products in certain states.
Consider standalone long-term care policies vs. life insurance plans
You can either purchase standalone LTC insurance or a life insurance plan which includes LTC. Some providers will only offer one or the other, so it’s best to decide which route you want to go down to narrow your search.
Compare benefit periods
One of the most important things to research is the benefits period, which is the length of time you will be paid or reimbursed for LTC. Ideally, this would last as long as you need it to, but lifetime policies can be hard to find. Most providers will have a set time until their benefits expire. This could be two or five or even ten years. The longer the better here, so try to find a policy with as long a benefit period as you can afford.
Weigh shared-care options
A lot of providers offer a shared-care option that allows you to share your coverage with your partner. This lets couples who have purchased long-term care policies to pool their coverage together. If one person has unused benefits, their spouse can use those benefits instead.
This is a popular way that couples can save money on their LTC or life insurance premiums. Be careful here though. If one person uses up the benefits, their partner could be left without coverage by the time they need care themselves.
Look out for a premium waiver
A great feature to look out for is a premium waiver. If you have to activate your benefits, your provider may waive your monthly premium. This means you won’t have to pay your premium for the months you are using the benefits. This is handy if you can no longer work due to illness and can’t afford to keep up with the costs of long-term care insurance.
The 5 Best Long-Term Care Insurance Providers
To further narrow the search, we’ve put together a list of the top 5 best long-term care insurance providers.
1. Mutual of Omaha
Mutual of Omaha is one of the best-known providers for life insurance, disability income insurance, financial services, and long-term care insurance. They go beyond what many other providers offer, with the following benefits as standard to make accessing LTC easier:
- Cash benefit: Unlike with some providers, you won’t have to pay upfront for care services and wait for reimbursement. Mutual of Omaha instead provides cash benefits so there’s no waiting period for reimbursement.
- Care coordination: A licensed health care professional will assess your needs and help you develop a personalized care plan.
- Waiver of premium: You won’t have to pay monthly premiums while receiving LTC services.
- Alternate Care: Your policy may cover different types of care if recommended by your care coordinator.
Mutual of Omaha also lets you add benefits such as inflation protection to prevent rate increases, shared care with a partner, security benefit, and return of premium which offers a refund on part of your premium.
MassMutual offers a range of helpful financial products that include long-term care coverage. MassMutual’s coverage comes with a six-year maximum benefit period which is longer than many other insurance companies provide. This means you’ve got extra peace of mind that your policy will cover your costs for longer.
If you are also on the lookout for a new life insurance policy, MassMutual offers a simple solution. You can take out a MassMutual combination policy that combines LTC and life insurance in one neat package. With the combined policy, you are guaranteed:
- A pool of long-term care benefits
- A death benefit
- A Policy Surrender Value that increases over time
3. New York Life
New York Life has been in the insurance business for an impressive 175 years and is a trusted name in the industry. The company provides a range of insurance policies including long-term care insurance and an option to combine it with life insurance.
New York Life offers two LTC options. There’s the NYL My Care and NYL Secure Care. The My Care policy is for those who want a basic, simple insurance solution. Secure Care is a solution tailored to your specific needs with customizable and comprehensive benefits.
It’s important to note, unlike other companies on this list, OneAmerica does not offer any standalone long-term coverage insurance. What they do offer is:
- Life insurance policies with LTC benefits included
- Annuities with LTC benefits
With the life insurance policy, you can use it to pay for in-home care, care in a facility, or other long-term care services. If you’re looking for a life insurance policy that ticks all the boxes, OneAmerica looks like a great bet.
For those going down the annuities route, investing in a fixed annuity means you can use the assets you have earmarked for long-term care. This means those assets will cover your first few years of care but you can also extend this with an optional coverage extension. However, this method might not be the best fit for everyone since it depends on the value of your assets.
If you end up not needing long-term care, good news! You can also access the cash value instead with OneAmerica.
5. Pacific Life
Pacific Life offers a combination policy of life insurance with LTC benefits on top. This is another great option for those who are trying to get two types of coverage in one.
If you’ve been struggling to find a policy that fits your needs, Pacific Life has a number of different policies to choose from. Each policy focuses on different needs and types of premiums such as single premiums and fixed premiums. Pacific Life offers flexibility when it comes to finding the right package for you.
Research Widely and Get Advice
Another great way to compare policies is to use a trusted comparison site. That’s why companies like LTC Consumer and the American Association for Long-Term Care Insurance exist. Both of these websites aim to make shopping around for insurance simpler.
LTC Consumer is one of the best resources for in-depth information about LTC insurance. LTC Consumer works by matching you with the best providers suited to your needs. All you need to do is fill in a quick form online which can shave a lot of time off your research.
American Association for Long-Term Care Insurance
The American Association for Long-Term Care Insurance is another great resource that will help you quickly compare different plans and policy options without having to contact each provider. They offer invaluable advice on where to focus your search, depending on your needs to help you find the best policy for you.
Realizing you or your loved ones might need help as you age is the pits. But having a solid plan for the future can set your mind at ease. Many LTC insurance plans offer flexible and affordable ways to allow for the best care suited for your specific future needs.