Long-term care is help with everyday living when an illness, injury, or cognitive decline makes it hard to manage on your own. It can happen at home, in assisted living, or in a nursing facility, and it can last for years.
Insurance usually measures the need by "activities of daily living": bathing, dressing, eating, toileting, transferring (getting in and out of a bed or chair), and continence. Needing help with two or more, or having a severe cognitive impairment, is a common trigger for benefits.
Who pays for it?
- You and your family. Without a plan, care is paid from savings and retirement accounts, or provided by family members who step away from work to do it.
- Medicaid. Medicaid can pay for long-term care, but only after you meet strict income and asset limits, which often means spending down what you have saved.
- Insurance. Coverage you put in place ahead of time.
Your insurance options
Traditional long-term care insurance
A standalone policy that pays for qualifying care. It generally offers the most care coverage per premium dollar. If you never need care, there is typically no payout, and premiums on many policies can increase over time.
Hybrid life and long-term care
A life insurance policy with long-term care benefits built in. If you need care, you can use the benefit for it. If you don't, your beneficiaries receive a death benefit. Many people like that the money is used either way.
Life insurance with a chronic illness rider
Some life policies let you access part of the death benefit early if you become chronically ill. It is not the same as dedicated long-term care coverage, so the terms are worth reading closely.
Self-funding
Some families with significant assets choose to set money aside instead of buying coverage. This can work, but it means accepting the risk of a long or expensive need.
When to plan
Long-term care coverage is medically underwritten. The earlier you look, the more likely you are to qualify and the lower the cost. Many people start in their 40s or 50s, often after watching a parent go through it.
Questions to ask
- Where would I want to receive care, and what does that cost where I live?
- Would my family provide care, and what would that cost them?
- Do I want coverage that pays something even if I never need care?
- How would premiums change over time?