There is no way to know for certain if you will someday require long-term care either in your home or in a specialized facility. But it’s likely when you consider that people are living longer than ever and that the U.S. Department of Health and Human Services reports that 69% of people will use long-term care services at some point. Many people find long-term care insurance worth it because it offers peace of mind knowing that they won’t drain their assets or put undue pressure on family members.

There are three main types of long-term care insurance: traditional long-term care insurance, hybrid long-term care insurance and life insurance with a long-term care rider. Each type of coverage has different pros and cons worth considering.

• Traditional long-term care insurance: Also known as standalone long-term care insurance, traditional policies exclusively cover long-term care expenses in your home or a facility.

• Hybrid long-term care insurance: Also known as linked benefits or combo policies pair long-term care with life insurance or an annuity. A hybrid policy provides coverage for both extended care in your home or a facility along with a death benefit. If you never need long-term care, your loved ones would benefit from a life insurance payout after you pass away. Hybrid policies have become increasingly popular in recent years.

• Life insurance with a long-term care rider: Some life insurance policies let you add on additional coverage for long-term care via a rider. A long-term care rider lets you use some of the life insurance policy’s death benefit to pay for long-term care needs while you’re still alive.

Long-term care insurance typically covers a comprehensive array of care in either your home or at a specialized facility. The exact type of covered varies by policy, but it often includes:

• Home health care such as skilled in-home nursing care; occupational, speech, physical and rehabilitation therapy; and help with activities of daily living like bathing and eating. Some policies may also include homemaker services like meal preparation and house cleaning services.

• Respite care that provides temporary care at a home, adult day care or nursing home. It’s meant to relieve a primary caregiver of responsibilities for a span of a few weeks per year.

• Adult day care centers

• Assisted living facilities

• Nursing homes

• Alzheimer’s special care facilities

• Memory loss units

Long-term care insurance typically doesn’t cover care provided by family members. It also usually doesn’t cover medical care costs⁠—those are typically covered by private health insurance and/or Medicare.

There is no one-size-fits-all answer to the question of how much long-term care insurance you need. That’s because everyone’s situation is different, and the amount of long-term care insurance you need will depend on several different factors. They include your budget, you and your family’s health history, your financial situation and the cost of care where you reside. Also, because almost all long-term care insurance policies are bundled with life insurance coverage (or an annuity), you will also want to consider that coverage level as well.

At MSOA, we offer a 100% free consultation to sit down with you to review your situation and retirement goals. We will show you what is available and help you make an informed decision that best meets your needs.

Today, most long-term care insurance policies come bundled with life insurance coverage. Because both long-term care insurance rates and life insurance rates generally increase with age, it’s best to start shopping for a hybrid life insurance and long-term care policy when you’re in your 40s or 50s. That said, you can still buy a policy if you’re in your 60s or older⁠—just know that you’ll probably pay more than someone who’s younger. If you're ready to purchase long-term care insurance or not sure if it's time to buy yet, reach out to us at (479) 857-2810.

While the cost of long-term care varies by facility and by where you live, it’s safe to say the cost is considerable. Long-term care costs range from $19,240 per year for adult day care to $105,850 per year for a private room in a nursing home. This kind of expense can quickly deplete your nest egg, which is why long-term care insurance is such an important coverage to consider. Many people are surprised to learn that long-term care coverage costs less than they imagined. You may even be able to deduct the cost of long-term care insurance premiums from your state and federal taxes.

You first need to meet the elimination period before your long-term care insurance policy starts to pay for care. The elimination period can be thought of as a deductible measured in time instead of money. A typical elimination period for a long-term care insurance policy is 90 days. Once that is met, you typically need to experience either severe cognitive impairment or be unable to perform two activities of daily living such as dressing or feeding yourself.

It’s always best to read over your individual long-term care policy to understand the exact conditions that trigger long-term care benefits.

That said, the tax-qualified long-term care policies sold today start to pay when the elimination period is met and one of the two following criteria are met:

• You have severe cognitive impairment, such as Alzheimer’s Disease or other forms of dementia, that make it impossible for you to safely live independently.

• You’re unable to perform two of the six activities of daily living (ADLs) without assistance or supervision. These ADLs include being able to:

  • Control your bladder and bowel movements

  • Dress yourself

  • Use the toilet and attend to your personal hygiene

  • Feed yourself

  • Bathe yourself

  • Move yourself into and out of a bed and chair

Because almost all long-term care policies are now hybrid policies that also include life insurance coverage, you will want to review your policy whenever you experience a major life change like a marriage, divorce or death in the family. It’s also a good idea to schedule an appointment to review your coverage once a year. This is especially true if your long-term care coverage includes a compound inflation rider or a purchase option.