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Buy Long-Term Care Insurance at the Right Age to Get the Best Value

Balance benefits, risks and costs, then decide


spinner image giant clock face as a platform and on it are coins of money and a home health care aide helping a women up out of her chair
Jin Xia

Insuring yourself against long-term care at any point in your life can go a long way toward making sure you don’t lose control over your property or burn through your savings.

“It’s protecting yourself against having to do, in essence, a fire sale of all your assets,” says Zach Chamberlain, a Louisville, Kentucky-based wealth planner at money management firm Baird. “You don’t want to have to liquidate assets that you weren’t planning on selling yet or sell a home to continue to pay for long-term care.”

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It also helps avoid placing an undue burden on adult children. Having a long-term care policy that allows you to pay for care and gives you the option of getting care outside your home — if needed — can make things easier on those caregivers, Chamberlain says. “The insurance isn’t necessarily just protection for the older person getting sick, it’s also making sure the burden isn’t too heavy on [your loved ones] that are there to help out.”

“Having some insurance to pay some of the costs is a way to get the care that you need without turning your family members into your unpaid caregivers,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “Some coverage is always better than none. People [make the mistake of] looking at long-term care insurance and think of it as all or nothing.”

Most boomers typically have other assets they can draw upon to make up the difference if their policy doesn’t cover 100 percent of the costs.

That’s why you should limit splurging too much in the early years of retirement. Health care and related caregiving costs will cost more in your 80s and 90s.

The cost of nursing home, assisted living, home care

In 2021, the most recent year for which data is available, the national median cost for a private bed in a nursing home was $108,405 a year, according to Richmond, Virginia-based Genworth, which sells long-term care policies. A yearlong stay in your own room at an assisted living facility runs $54,000. It will cost even more for those who prefer to get care at their own home with a health aide: $61,776. Keep in mind that Medicare doesn’t help with these costs, only short-term rehabilitation after a hospital stay.

Those are big numbers. However, boomers who socked money away in their 401(k) plans at work for at least 10 straight years had an average account balance of $400,000 at the end of September 2023, according to Fidelity Investments.

And savers who have been in the same employer-sponsored retirement savings plan for 15 or more years have close to $500,000. 

At what age should you buy long-term care insurance?

The longer you wait to purchase a long-term care policy, the more it will cost you. For a 55-year-old man, the annual premium with an inflation rider that boosts benefits by 3 percent each year is an estimated $2,075 a year, according to the 2024 price index from the industry association. The cost to that same man who waits until 65 to purchase a long-term care policy will jump about 51 percent to $3,135 a year.

Despite the higher monthly premium, the man who purchases a long-term care policy at age 65 will save $4,850 in total premiums by age 80 compared to a man who purchased one at age 55.

If a woman buys a long-term care policy with that 3 percent annual inflation adjustment at 65 rather than at 55, her premiums will increase around 43 percent to $5,265 a year. But she’ll save $13,525 in premiums through age 80, according to the association. 

Because in general women have longer life expectancies, they pay more than men every step of the way when not part of a couple — from $135 more a month at age 55 to as much as $178 more a month at 65, according to the association.

But don’t wait for too long to purchase the insurance

If you delay too much, premiums could rise steeply, or insurance companies could reject you. A 65-year-old couple waiting until age 75 to get coverage would see their premium nearly double, a 91.9 percent increase, according to the insurance association. Seeking coverage at age 70 or older also reduces your odds of getting covered at all by nearly 50 percent.

“Most people focus on cost,” Slome says. “The single most important factor if you’re going to look into long-term care insurance or buy it is your health.”

The reason: Many people are unable to qualify for coverage because of the discovery of ailments that are treatable.

“Long-term care insurers aren’t concerned that you’re going to die,” Slome says. “They’re concerned that you’re going to live a long life and, thus, [will] need care.”

The optimal age to shop for a long-term care policy, assuming you’re still in good health and eligible for coverage, is between 60 and 65, financial advisers say. Why? This Goldilocks age range is not too young and not too old. A still-affordable monthly premium coupled with a total savings is a winning combination.

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However, waiting until age 65 is a gamble, financial planners caution. Anyone could be rejected because health or medical-test results indicate a high probability of problems that might lead to a need for long-term care.

“By waiting, you are betting that you will stay healthy,” says Michael Foguth, founder and president of Foguth Financial Group in Brighton, Michigan. “It’s a calculated risk.”

When to start conversations with a financial adviser

If your health is OK and you don’t have hereditary problems that insurance companies don’t like, it makes sense to start conversations with your financial adviser in your 50s about the age at which you should buy long-term care coverage and what the costs might be, says Nicole Birkett-Brunkhorst, a senior wealth planner at U.S. Bank Private Wealth Management in the St. Louis area. For most people, it makes financial sense not to wait beyond 65 to get coverage.

“Typically, once a client is in their mid-60s, this is when we’re really being intentional with these conversations to get them to move forward,” Birkett-Brunkhorst says. “Since health care costs, inflation and longevity can make or break a financial plan, you need to have a funding plan” for long-term care insurance.

Be aware: Long-term care insurance premiums can increase through the years. But an insurer must get approval from a state’s regulators to raise the premium, something that doesn’t happen with other insurance, such as for your house.

Long-term care insurers have been imposing significant rate hikes for about a decade, and the number of insurers offering this type of coverage has shrunk. That’s why it’s important to huddle with your financial adviser and map out a plan that takes rate increases into consideration, so you’re not forced to cancel the policy after you’ve paid premiums for years.

Consider these factors when buying a policy

When Ryan Graham, a financial adviser at Altfest Personal Wealth Management in New York City, evaluates a client’s need for long-term care insurance, he first does an analysis to determine if a client has enough assets to pay for long-term care out of pocket.

Put another way, “Is insurance necessary?” he asks.

He also asks his clients to analyze their family history with these questions:

1. Health. Do family members have hereditary conditions?

2. Long-term care. Have other family members needed assisted living or nursing care?

If the odds of needing future long-term care are high, the next step is to see if insurance “fits into their budget” and if it’s “realistic to pay premiums,” Graham says.

If clients — oftentimes spouses purchase insurance together — can afford to pay from their savings or are willing to sell their house to finance long-term care, buying insurance is not necessary, he says. But if they are risk averse and don’t like the idea of unknown future costs, they should get the insurance.

“We have these conversations with clients every year starting at 45 and 50,” Graham says. “Usually, the trigger is not pulled till later.”

What if you invest the money instead?

Since long-term care insurance is a big investment with an unpredictable outcome, it’s fair to ask if the money you might lay out on insurance coverage would be better off funneled into stocks and bonds. If a man invested $173 a month from age 55 to 80 and had a 7 percent return, the investment would grow to $137,171, according to an investment simulation run on Calculator.net.

That would be enough to cover more than half of the current cost of $216,810 for a two-year stay in a private room in a nursing home and serve as a savings account if you never need long-term care, but self-financing your care that way is no sure thing.

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One problem: You might not save the money every month.

Another: You might not get the 7 percent return you planned on, or the market might plunge just when you need the money, Foguth says.

The nursing home isn’t going to wait for the market to rebound for you to pay your monthly bill,” he says.

What about a life policy with long-term care rider?

Traditional long-term care policies are use-it-or-lose-it insurance. You may never need to make a claim, and all the money you put toward premiums essentially would be wasted.

That’s why a growing number of financial advisers recommend that people consider so-called hybrid or “linked” policies, such as life insurance or an annuity with a long-term care rider. That means the policy provides dual coverages.

“The benefit is triggered either with a death or a long-term care event,” says Don Davenport, lead product manager with Wells Fargo Wealth & Investment Management in Champlin, Minnesota.

You’ll pay more for a hybrid policy. Is it worth it?

While you pay more for a hybrid policy than you would for a traditional long-term-care-only policy, you’ll be able to tap death benefits early if you need the cash to pay for a stay in a nursing home or assisted living facility or require other long-term care.

The amount of your withdrawal will reduce the death benefit. If you don’t ever need long-term coverage, your beneficiaries will receive the full death benefit when you die.

“Having a linked benefit product means that somebody will get something in return in the future,” Slome says.

Another benefit of hybrid coverage is not worrying about an insurer raising the premium or changing plan features. The policy is priced according to how long you are likely to live, Foguth says.

“It’s priced as life insurance,” Foguth says. “They’re not going to change the pricing or change the benefits.” It’s all about the odds.

Trying to predict needs is tricky

Foguth can’t predict if you will ever need nursing home services, but you will die one day. If you opt for this type of coverage, premiums for any life insurance are cheaper if a policy is purchased at a younger age.

A plus: Long-term care insurance premiums can be deducted on your federal tax return, if you itemize. For the 2023 tax year, people age 61 to 70 can deduct $4,770 and those age 71 and older can deduct $5,960, the IRS says.

What you don’t want to do is have the long-term care insurance premium blow up your financial plan.

“We want to be mindful that we’re targeting a policy [for clients] that doesn’t put their other financial goals in jeopardy,” Birkett-Brunkhorst says.

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