Traditional Long-Term Care Insurance
A standalone policy that pays toward care when you can no longer manage on your own. It is the most benefit per premium dollar in this family, and it carries the one feature everybody has heard about: the premium is not guaranteed.
Read this first
Long-term care insurance is medically underwritten. Acceptance is not guaranteed and health history matters, which is why waiting until care is close usually removes the option entirely.
Benefits on a tax-qualified contract are triggered by a licensed health care practitioner certifying that you cannot perform at least two activities of daily living for a period expected to last at least 90 days, or that you need substantial supervision because of severe cognitive impairment.
Medicare does not pay for custodial long-term care — help with bathing, dressing, eating and moving about. It pays only limited skilled care under narrow conditions. Check this for yourself at Medicare.gov or with your State Health Insurance Assistance Program before relying on anything an agent tells you.
Premiums on traditional long-term care insurance are NOT guaranteed. The insurer can apply to your state's insurance department to raise them for an entire class of policyholders, and on older policy series that has happened. Nobody can promise you that your premium will never rise.
This is use-it-or-lose-it coverage. If you never need care, the premiums you paid are not returned and there is no death benefit.
The problem it solves
Most people reach their eighties needing help with ordinary things — bathing, dressing, getting safely out of a chair. That help is expensive, it is not medical care, and Medicare does not pay for it. Medicaid does, but only after you have spent down almost everything you own.
Between those two lies the gap this product fills. A traditional long-term care policy pays a monthly amount toward care, at home or in a facility, so that a long claim does not consume the assets you spent a lifetime building and does not turn your children into your carers by default.
Three things happen, in this order
You choose a monthly benefit, a pool and an elimination period
The monthly maximum is what the policy will pay in a month. The pool is the total it will pay over the life of the policy. The elimination period is how long you pay for care yourself before benefits start — ask whether it counts calendar days or days you actually received service, because they are not the same.
A practitioner certifies that you need care
On a tax-qualified policy the trigger is set by statute: you cannot perform at least two of six activities of daily living for a period expected to last at least ninety days, or you need substantial supervision because of severe cognitive impairment.
The policy pays toward care until the pool is used up
Reimbursement designs pay against receipts, indemnity designs pay the full monthly amount once you qualify, and cash designs pay you to spend as you choose. Which design you have matters enormously at claim time.
Who this suits, and who it does not
The second list matters more than the first. An agent who only writes the first one is selling, not advising.
Worth considering if…
- You are in your fifties or early sixties, healthy enough to be accepted, and have assets worth protecting but not enough to fund several years of care outright.
- Your income is stable enough that you could absorb a premium increase without having to drop the policy — which is the outcome that wastes everything you have paid.
- You want the largest benefit pool per dollar of premium and do not need the money back if care never happens.
Probably not for you if…
- A premium increase would force you to lapse. Dropping a policy after fifteen years of premiums is the worst outcome in this product, worse than never having bought it, and it is a real risk because premiums are not guaranteed.
- You cannot accept getting nothing back. This is use-it-or-lose-it: no care, no benefit, no death benefit, no refund. If that is intolerable, look at a hybrid policy instead and accept less care benefit per dollar.
- Your assets are either very large or very small. With enough wealth you can self-fund and insurance is an expensive convenience; with very little, Medicaid is the realistic answer and premiums you cannot afford only delay it.
Who we would place this with
We are independent and place long-term care coverage with more than one company. The specific companies are not listed on this page yet, because we will not publish a name or a benefit we cannot cite to that company's own current material — the same rule the rest of this site follows. Premiums here depend on your age, your health and the benefit you choose, so they are quoted for you directly rather than published. Call and we will tell you exactly who we would approach for you and why.
Questions people actually ask
Can my premium go up?
Yes, and you should assume it can. Premiums on traditional long-term care insurance are not guaranteed: the insurer can apply to your state's insurance department to raise them for an entire class of policyholders, and on older policy series that has happened. Nobody can honestly promise you a premium that will never rise, and an agent who does is either misinformed or telling you what you want to hear.
Does Medicare pay for long-term care?
Not for custodial care, which is the help most people actually need — bathing, dressing, eating, moving about. Medicare covers limited skilled care under narrow conditions, typically after a qualifying hospital stay and only while skilled care is needed, and it stops well before most people expect. This is the most common and most expensive misunderstanding in retirement planning. Check it at Medicare.gov or with your state's SHIP counselors.
What happens if I stop paying?
Ordinarily the coverage ends and the premiums are gone. Many policies offer a nonforfeiture option, bought for extra premium, that leaves you a reduced paid-up benefit. Separately, most states require a contingent nonforfeiture protection that becomes available if your premium is raised by a substantial amount — so if you ever receive a rate increase, ask what your options are before you simply drop the policy.
Will it keep up with the cost of care?
Only if you buy inflation protection, and that choice matters more than almost any other. A benefit that looked generous at sixty can be badly inadequate at eighty-five, which is when you are most likely to claim. Options usually include compound inflation at a stated rate, simple inflation, an index-linked option, or a future purchase option that lets you buy more later at your attained age. Compound costs the most at the outset and protects the most later.
Is the premium tax-deductible?
Premiums on a tax-qualified policy may be deductible as a medical expense within age-based annual limits that the IRS indexes each year, and the rules differ again for the self-employed and for business owners. Benefits paid on a per-diem basis are subject to an annual per-diem limit, also indexed. Because those figures change every year, ask for the current ones rather than trusting any number printed on a web page. This is not tax advice.
Ask for a quote on Traditional Long-Term Care Insurance
Tell us how to reach you and which state you are in. A licensed agent calls back, usually the same business day, and will tell you plainly if a fully underwritten policy would serve you better.
The other three
Same family, different jobs. Match the product to how long the need lasts.
Hybrid (Asset-Based) Long-Term Care Insurance
A life insurance policy whose death benefit can be accelerated to pay for care, usually with a second pool that keeps paying after the death benefit is used up. If you never need care, your heirs get the death benefit.
Worth a look if use-it-or-lose-it is what has stopped you buying anything.
Annuity-Based Long-Term Care
An annuity whose value can be drawn on for qualified long-term care, often with easier underwriting than a standalone policy. Frequently confused with an annuity income doubler, which is a different thing entirely.
Worth a look if you have been declined elsewhere, or have an annuity doing no defined job.
Long-Term Care and Chronic Illness Riders
Riders that let a life insurance policy pay for care. Two of them look alike on a brochure and behave very differently at claim, and only one of them is long-term care insurance.
Worth reading before you compare two life policies where one advertises a care feature.