Is Long-Term Care Insurance Worth It? Both Sides, Plainly

For some people, yes. For many, no. Long-term care insurance is generally worth considering when you hold enough assets to lose but not enough to comfortably self-fund several years of care, you can pass medical underwriting, and you can absorb future premium increases. At both the low and high ends of the wealth distribution, self-funding is often the more rational answer.

That is an unsatisfying answer, and it is the honest one. LTC insurance transfers a risk that is common but not universal, expensive but not uniformly so, priced by insurance companies whose pricing history has not been reliable. What follows sets out both sides with the numbers.

What long-term care insurance is, and what long-term care insurance covers

Long-term care means help with the ordinary activities of daily living — bathing, dressing, eating, transferring, toileting and continence — or supervision required by a cognitive impairment such as dementia. This is custodial care, not medical treatment. A long-term care insurance policy pays for those long-term care services once a licensed health practitioner certifies that you cannot perform a set number of those activities (usually two of six) or have a severe cognitive impairment.

A policy will generally cover long-term care expenses for in-home care from a home health aide, adult day care, assisted living, memory care, and nursing home care. The types of care that qualify span several levels of care, from occasional care assistance at home to full-time care in a facility. Most contracts require a written care plan before you receive care benefits, built around your own care preferences.

Most long-term care policies pay a daily or monthly maximum up to a total pool of benefit dollars, after an elimination period — often 90 days, during which you pay for care out of pocket. To qualify for long-term care benefits you must meet the benefit trigger and satisfy that waiting period.

This matters because Medicare or private health insurance will not cover long-term care expenses. Regular health insurance is not a long-term care plan. Medicare does not cover custodial long-term care; it covers up to 100 days in a skilled nursing facility after a qualifying hospital stay, and only while skilled care is required. KFF reports that roughly four in ten adults incorrectly believe Medicare is the main way long-term care gets paid for. Medicaid is the largest payer for institutional long-term care in the United States.

The pros of long-term care insurance: the case for coverage

The risk is substantial and the cost of long-term care is real

The federal Administration for Community Living estimates that someone turning 65 has almost a 70% chance of needing some type of long-term care service, averaging about three years — 3.7 years for women, 2.2 years for men. Roughly 20% will need care for longer than five years, and about one-third will never need it at all.

The U.S. Department of Health and Human Services, through its Office of the Assistant Secretary for Planning and Evaluation, uses a stricter definition and reaches a lower number: in its 2022 research brief, about 52% of Americans turning 65 will develop a disability serious enough to require long-term services and supports, and about one in seven will need that help for more than five years. Both figures are defensible; they measure different things. Any article quoting one without the other overstates its precision.

On cost, the same ASPE brief projects roughly $138,000 in future long-term care costs for an American turning 65, closer to $266,000 among those who use paid services, and about 17% spending at least $100,000 out of pocket. Families pay about half of these long-term care expenses directly. KFF put national spending on long-term services and supports above $415 billion in 2022. The widely quoted cost of care survey figures circulating online come from private companies, not public agencies; federal projections are the more neutral benchmark for long-term costs.

It protects assets, and it relieves adult children

A policy converts an open-ended liability into a known annual premium. But the reason many families say the coverage earned its keep has less to do with money. Long-term care needs get coordinated by somebody, usually a daughter or son who is still working. A funded benefit buys professional in-home care or assisted living without a family meeting about whose savings pay for it, and without one adult child absorbing the caregiving work by default. That is not captured in any rate-of-return calculation.

Benefits are generally received tax-free

Benefits paid under a tax-qualified long-term care insurance contract are generally excluded from income under Internal Revenue Code section 7702B. For indemnity-style policies that pay a fixed amount regardless of actual expenses, the IRS sets a per diem limitation — $430 per day for 2026 under Revenue Procedure 2025-32 — above which amounts may be taxable unless matched by actual costs. Eligible premiums are also treated as a medical expense within age-based limits, $500 to $6,200 for 2026. We cover the tax treatment separately; the point is that benefit dollars usually arrive without a tax haircut, which improves the economics relative to liquidating taxable investments to pay for care.

The cons of long-term care insurance: the case against coverage

Most people who buy never collect a dollar

This is the plainest fact about the product. The American Association for Long-Term Care Insurance, an industry trade association, has published actuarial estimates that someone buying at age 60 has roughly a 50% lifetime chance of using the policy at all — and about 35% once a 90-day elimination period is applied. Put the other way: on those estimates, close to two out of three buyers at 60 pay premiums for the rest of their lives and never receive a benefit payment.

That is how insurance protection works. It is also the number to sit with before you buy a long-term care policy: this is not an investment, it is the elimination of a tail risk, and the most likely single outcome is that you fund somebody else’s claim.

Long-term care policies are guaranteed renewable, not guaranteed premium. Insurance companies can and do raise rates on entire classes of policyholders, subject to state approval, and the scale of this in older blocks has been severe. A Society of Actuaries survey of 2024 rate activity, covering 17 companies representing more than 75% of U.S. long-term care premium, found an average requested increase of 56% — up from 47% in 2021 — with cumulative increases in some jurisdictions exceeding 400%. Regulators approved an average of 28% of what was requested. Nearly 12% of affected policyholders responded by reducing their benefits rather than paying more.

The industry’s answer is that today’s pricing uses far more conservative assumptions about lapse rates, interest rates and claim incidence, which is genuinely true. It is also what was said about the pricing that later required 400% increases. Newer policies may hold up better; nobody can promise that they will. A separate article covers premium increases and a policyholder’s options.

The market itself reflects the damage. The NAIC’s Center for Insurance Policy and Research has noted that the number of insurers offering traditional long-term care coverage fell from slightly over 100 to about a dozen, with individual sales down roughly 60% since 2012.

Long-term care insurance is not available on demand. It is medically underwritten. An HHS ASPE research brief reported roughly 20% of applicants denied overall, fewer than 7% under age 45, and 44% of those over 80. The American Association for Long-Term Care Insurance, the industry trade association, reports that insurers decline nearly half of applicants after age 70.

So “I’ll deal with it later” is not a neutral strategy. Conditions unremarkable to a primary care doctor — early cognitive complaints, mobility limitations, certain medication histories — are declinable in long-term care underwriting. Waiting does not just raise the cost of long-term care insurance; it can remove the option.

Premiums paid over decades carry a real opportunity cost

A policy bought at 55 may be funded for 30 years before any claim. Those premiums are capital that would otherwise have compounded. Whether the trade is favorable depends on assumptions nobody can verify in advance: your investment return, your health trajectory, how many rate increases arrive, and whether you use the benefit. Self-funded dollars remain yours if you never need care; premium dollars do not.

Self-funding is rational at both ends of the wealth distribution

If your assets are modest, the premium competes with current living expenses, and the risk is one the household cannot afford to pre-pay. If your net worth is large, several years of nursing home or in-home care is an absorbable line item you can pay for out of pocket, and paying an insurance company to hold that risk adds cost without adding capacity. The population for whom long-term care insurance most clearly works sits between those poles: enough to protect that losing it would change the outcome for a spouse or heirs, not enough that the cost of long-term care could be paid from cash flow without disruption.

How much does long-term care cost, and how much does long-term care insurance cost?

The care itself

Federal projections put average future long-term care costs at about $138,000 for someone turning 65, and about $266,000 among those who actually need long-term care services and pay for them. What you would pay for long-term care services depends on the kind of care you need, the hours, and the region.

The coverage

The cost of long-term care insurance varies with issue age, health, benefit amount, benefit period, elimination period and inflation protection. A traditional long-term care policy and a hybrid design price very differently, so the long-term care insurance cost you are quoted depends as much on the type of long-term care product as on your age. Inflation protection is often the largest driver of cost and the feature most often cut when budgets tighten, which matters because care costs compound over the decades between purchase and claim. We treat cost by age in a separate article. The point here is that long-term care premiums are a lifetime obligation with a variable price, and should be stress-tested against a materially higher number than today’s quote.

What are the alternatives to long-term care insurance?

Self-funding. Earmarking a portion of retirement assets to pay for long-term care out of pocket. Simple, fully flexible, and exposed to the tail scenario of a long dementia course.
Hybrid life and long-term care products. A life insurance policy or annuity with a long-term care rider, where unused benefits pass as a death benefit. Premiums are typically higher or paid as a lump sum, and money is not lost if care is never needed. These have taken most of the new-sales market from traditional long-term care policies.
Coverage with life insurance you already own. An accelerated benefit or chronic illness rider gives access to part of the life insurance death benefit under defined conditions. Cheaper than pairing separate life insurance coverage and long-term care contracts, and narrower.
Shared care and shorter benefit periods. A smaller pool of benefit dollars covering two or three years rather than a lifetime, addressing the most common claim durations at a lower premium.
Family caregiving. The default in most households, and unpriced. Worth costing out in lost wages before assuming it is the cheap option.
Home equity and annuitized income. Converting illiquid assets into a care budget.

When is the best time to buy long-term care insurance?

Most people who get long-term care insurance do so between their mid-50s and late 60s. Buying earlier means a lower annual premium and a better chance of qualifying medically, but more premium years and more exposure to rate increases. Buying later means fewer premium years but a higher rate and a much higher chance of being declined. No arithmetic resolves this without knowing your health and investment assumptions.

Is long-term care insurance worth it for you? What the answer turns on

These are the variables that move the answer for a given household:

Assets relative to plausible care costs. Could five years of assisted living or nursing care be paid without changing a surviving spouse’s standard of living?
Whether a spouse or partner depends on the same assets. Often the strongest argument for coverage, and the one least about you.
Insurability today. Underwriting is a gate, and it narrows with age and diagnosis.
Premium durability. Whether the household could still pay after a 50% or 75% increase in retirement, without cutting benefits.
Family structure. Who would otherwise coordinate and fund care, and what that would cost them.
Family health history. Dementia drives the long, expensive claims that self-funding handles worst; long-term health patterns in your family beat population averages as a guide.
Care options you would actually want. A preference for in-home care or assisted living shapes which benefit designs are relevant.
Tolerance for paying for something you probably will not use. A legitimate preference either way.

A licensed insurance agent or a fee-only planner should work through these with your actual numbers. Anyone reaching a conclusion before seeing them is not analyzing your situation.

Long-term care and long-term care insurance in Florida

Florida has one of the older populations in the country — 21.8% of residents are 65 or over, per Census Bureau QuickFacts. Florida law provides specific protections for long-term care policies issued in the state. Policies are guaranteed renewable, so an insurer cannot cancel except for nonpayment. Rate increases must be approved by the Florida Office of Insurance Regulation, and policyholders must receive at least 45 days’ advance written notice with options to make the coverage more affordable. Insurers must offer the option to name a secondary addressee for lapse notices, and a policy that lapsed unintentionally because of cognitive impairment or loss of functional capacity may be eligible for reinstatement within five months.

Frequently asked questions

What percentage of people actually use their long-term care insurance?

Actuarial estimates published by the American Association for Long-Term Care Insurance, an industry trade association, put the lifetime probability that a buyer at age 60 uses the policy at about 50% with no elimination period, and about 35% with a typical 90-day elimination period. NAIC Experience Reports show about 5.5 million long-term care insurance policies in force at year-end 2024, roughly $18.6 billion in claims incurred that year and about $212 billion paid since inception.

What are the disadvantages of long-term care insurance?

Most buyers never file a claim; premiums can be increased on entire classes of policyholders after purchase; medical underwriting declines a significant share of applicants; the premium is a lifetime obligation competing with other retirement spending; and benefits are conditional on meeting a benefit trigger certified by a licensed health practitioner.

Does Medicare or private health insurance pay for long-term care?

No. Medicare covers skilled nursing facility care for up to 100 days after a qualifying hospital stay and some home health care, but it does not cover custodial long-term care. Standard private health insurance does not cover it either. This is the coverage gap long-term care insurance is designed to address.

What are the three types of long-term care insurance?

Broadly: traditional long-term care insurance, a standalone policy that pays only for care; hybrid life and long-term care products, where an unused benefit becomes a life insurance death benefit; and annuity-based products with a long-term care benefit. Riders on an existing life insurance policy are a fourth, narrower route. Which kind of care each covers is similar; what differs is what happens to the money if you never need care.

Can I combine long-term care coverage with life insurance?

Yes. Hybrid and linked-benefit designs pair a life insurance policy with a long-term care benefit, so money not spent on care is paid to beneficiaries. The tradeoff is a higher or lump-sum premium and, in some designs, a smaller pool of long-term care benefits than a comparably priced traditional policy.

Is long-term care insurance worth it if you are over 70?

It becomes harder on both dimensions. Premiums at older issue ages are substantially higher, and decline rates rise sharply — ASPE reported 44% of applicants over 80 denied. For some households the coverage is still obtainable and still makes sense; for many the practical alternatives are hybrid products, a shorter benefit period, or self-funding.

What should you look at when comparing long-term care insurance policies?

The benefit trigger language, the daily or monthly maximum, the total benefit pool, the elimination period, whether inflation protection is included and at what rate, how in-home care or assisted living is treated relative to a nursing home, the rate increase history of the block, and the financial strength of the insurance company. Your state insurance department can confirm what has been filed and approved.

Disclosures

This article is general educational information and is not financial, tax, legal or insurance advice, nor a recommendation to purchase, retain or terminate any insurance policy. Policy benefits, exclusions, limitations and premiums vary by contract and by state, and only the issued policy governs. Figures cited are drawn from public sources including HHS ASPE, the Administration for Community Living, the NAIC, the Society of Actuaries, KFF, the IRS, the U.S. Census Bureau and the Florida Department of Financial Services, and are subject to change. Discuss your circumstances with a licensed insurance professional and a qualified tax or legal advisor. Lifeworth Insurance Agency is a trade name of Lifeworth Financial Group LLC, National Producer Number 21228343, licensed in Florida.

More on this: our long-term care insurance page.