Money, Health, and Other Things

Educational Blog in the Area of Family and Consumer Sciences for the Middle Peninsula


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Risk Management and Insurance Basics, Part XVI

This week, we’ll conclude our discussion on long-term care insurance.

How much does long-term care insurance cost?

According to the American Association for Long-Term Care Insurance, annual premiums purchased at age 55 average around $2000 a year, or $3000 for a couple. However, this can range from below $1000 to more than three times the average cost depending on a variety of features.

Premiums are generally paid for the rest of the policy holder’s life, but some policies allow premium payments for shorter periods, like 10 years. These policies, however, will generally have higher premiums.

Age is another factor that impacts premium cost – the later you get a policy in life, the more expensive the annual premiums will be. With that said, it’s typically not recommended to look into Long-Term Care Insurance until you’re in your mid-50s or else you may be paying those annual premiums for a very long time.

Many policies will state a benefit amount, often as a maximum amount per day. The higher the daily coverage, the more expensive the policy.

Many long-term care policies include waiting or elimination periods, the period you have to wait until receiving benefits. As we’ve discussed in previous weeks, the longer the elimination period, the lower the premium.

Many policies will have options for inflation protection, offering you an increase in maximum benefit amounts each year. The better protected your policy is from increasing long-term care costs, the more expensive the policy will generally be.

Does everyone need long-term care insurance?

At the risk of sounding like a broken record, whether or not long-term care insurance makes sense for you depends on your personal approach to risk management and your current financial situation. Those with few or no assets, and those who cannot afford long-term care premiums, may plan to apply for Medicaid coverage of long-term care cost and/or depend on family member for care taking. Those with very significant assets, who prefer to retain risk, may choose to self-insurance, paying any future long-term care expenses out of pocket. For others who can both afford the long-term care premiums and would prefer to transfer that risk, long-term care insurance may make sense.


That concludes our sixteen (!!) part discussion on insurance, feel free to go back and check out any of the previous parts you may have missed and let us know your thoughts and if you have any suggestions for future topics! gjsturm@vt.edu