Long Term Care Insurance Basics

According to the Virginia Cooperative Extension, the average senior American spends $30,000 to $60,000 per year on nursing home care (2009). For this reason, more and more people are purchasing long-term care (LTC) insurance. As Americans live longer, personal savings, retirement accounts and home sales are often not enough to cover the full cost of assisted living.

Long-term care insurance—sometimes called “assisted living insurance”—may ease this financial burden. Before obtaining a policy, though, make sure that you understand the basics of obtaining and navigating a long-term care policy.

Long-Term Care Insurance Interviews

The first step in obtaining assisted living insurance is the interview process. During this step, a home visit may be scheduled to assess the patient’s current health. This health screening helps to determine the level of insurance risk the company is taking. Applicants in poor physical health stand a higher chance of being denied, as they are a greater financial risk.

Long-Term Care Insurance Premiums

If a policy is offered, the LTC insurance company will likely provide a variety of premium options. You’ll be given a choice between a low premium for a longer period of time, and a higher premium for a shorter period of time.

Discuss your options with the insurance company and your financial adviser to make the choice that is right for you, your budget and your healthcare needs.

Long-Term Care Insurance Benefits

The benefits that you receive will depend on your plan, as well as a variety of other factors, including the:

  • Duration of nursing home care (or assisted living care)
  • Premium you opt for
  • Protection options.

Before choosing a long-term care policy, discuss the various benefits packages with your insurance agent. Mention any health conditions that you have, and work with him to determine the policy that will provide the best possible coverage. Your goal is to purchase the most comprehensive assisted living insurance that you can afford.

Duration of Assisted Living/Nursing Home Care

Long-term care insurance companies generally offer two types of policies—those with an unlimited duration of care and those with a limited duration:

  • Often, policies with an unlimited duration of care require premium payments for life. These policies cover a specific benefit amount (for example, $150 per day) for an unlimited amount of time.
  • Limited duration of care policies cover a specific benefit amount, but for a limited amount of time (for example, $150 per day for up to three years). These policies generally require one lump premium payment, or premium payments for a few years. They are more affordable, but less comprehensive.

Protection Against Inflation

As the cost of living rises, so too will the cost of long-term care. For this reason, many long-term care insurance policies offer protection against inflation for a small additional fee. Over time, your premium payments are compounded to reflect the increase in the cost of living. If you can afford this upgrade, it’s well worth purchasing.


Medicare. (2009) Paying for long-term care. Retrieved October 29, 2010, from http://www.medicare.gov/longtermcare/static/PayingOverview.asp

Virginia Cooperative Extension. (2009). Long-term care insurance.Retrieved October 29, 2010, from http://pubs.ext.vt.edu/354/354-172/354-172.html