Long-term care coverage works a bit differently than your traditional health insurance policy. For starters, with long-term coverage, you or a loved one receives benefits for items such as custodial care. Custodial care is assistance with basic daily living events such as eating, dressing, and bathing. What’s more, some of these policies come with optional coverages that you can tailor to your specific needs. Here’s a deeper dive into how this coverage works, when you might need it for you or a loved one, and the factors that drive cost.

Long Term Care Coverage Explained

When you or a loved one age, it’s important to account for the care required to provide a better quality of life. This is especially the case should you or a relative incur a chronic condition such as Alzheimer’s, where you might require in-home care or help to defray costs associated with adult day care or an assisted living facility. Health insurance doesn’t provide adequate support in situations like these, so it’s important to plan in advance for this type of care—should you or a relative require it. That said if you wait until you develop a condition, you might not qualify for the coverage. This is why it’s a good idea to include this as part of your long-term financial plan before you reach your 50s.

Do I Really Need This Coverage?

A study conducted by the U.S. Department of Health and Human Services along with the Urban Institute found that 50% of adults aged 65 or older will eventually require long-term care services. In this study, they found many who require services will only need them for two years or fewer, but even one year of long-term care can be really expensive. Personal finance website NerdWallet researched the annual costs of long-term care. For a home health aide, it can cost around $50,336 for one year of care whereas an assisted living facility will run you $48,000.


Now think about this cost as it relates to your retirement. For many people, taking on $50,000 in added health care expenses will drastically reduce the way they can spend their retirement savings. Therefore, by having long-term care coverage in place, you have the ability to pay for the services needed without depleting some or all of your retirement savings. What’s more, you’ll have more choices available for care so you can feel comfortable choosing the right fit for you.

Factors Affecting Costs

There are several factors that insurance underwriters examine when determining coverage costs. The first is the age and health of the person on the policy. The older a person is or the poorer health they have will greatly impact the cost of care, and in some instances, it could make them ineligible for coverage. Another factor is gender. Since on average women have a longer life expectancy than men, they pay more for coverage since insurers believe they’re more likely to use it. The amount of coverage also impacts how much you’ll pay for it. To demonstrate, if you want higher lifetime limits or daily coverage amounts, then some insurance companies will grant you these provisions, but you’ll pay more for them. Because of the factors involved, it’s a great idea to plan for long-term care coverage before you need it. This allows you to have protection in place and pay less for it.


To learn more about this coverage in greater detail, feel free to contact an independent Cole Harrison agent.

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