Long-Term Care Insurance
Insurance covering nursing home, assisted living, or in-home care for those unable to manage daily activities.
What is LTC Insurance?
Long-term care (LTC) insurance covers the costs of extended care services — nursing home, assisted living, memory care, or in-home aide — for individuals who can no longer perform basic activities of daily living (ADLs) such as bathing, dressing, or eating. Without coverage, long-term care represents one of the largest uninsured financial risks in retirement: nursing home care averages $90,000–$115,000 per year nationally, and the average care period is 2–4 years. Medicare covers only limited short-term skilled nursing care; Medicaid covers custodial care only after the individual spends down most assets. Hybrid LTC-life insurance products have grown in popularity as an alternative to traditional LTC-only policies.
Example
A 60-year-old couple purchases long-term care insurance policies providing $5,000/month each in LTC benefits with a 3-year benefit period. The annual premium is approximately $2,500–$3,500 per person. If one spouse eventually needs memory care at $8,000/month for 3 years, the policy pays $180,000 — protecting the healthy spouse's retirement savings from being depleted by the care costs.