Everything You Need to Know About Purchasing Long-Term Care Insurance in Today’s Market

When most people think about retirement planning, they focus on savings, Social Security, and investments. But there’s another piece of the puzzle that’s often overlooked: long-term care insurance (LTCI).

Whether it’s home health care, assisted living, or a nursing home, the costs of extended care can be devastating to a family’s finances. According to Genworth’s 2024 Cost of Care Survey, the average annual cost of a private room in a nursing home is over $110,000. Assisted living averages $4,500–$6,500 per month, and even home health aides can run $25–$50 per hour.

So, what do you need to know — and what questions should you ask — before purchasing a policy? Let’s walk through it.

1. What Exactly Is Long-Term Care Insurance?

Long-term care insurance helps cover the cost of services when you can no longer care for yourself due to aging, illness, or injury. This can mean:

• Home Health/In-Home Care: Help with bathing, dressing, cooking, or nursing visits.

• Assisted Living Facilities: Housing that provides daily support but still allows independence.

• Nursing Homes: Full medical and custodial care, 24/7.

Without insurance, these expenses often eat through retirement savings or force families to rely on Medicaid — which has strict eligibility requirements.

2. Key Questions to Ask Before Buying

Here are the non-negotiable questions to ask an insurance agent or provider before you sign anything:

1. What does the policy cover?

   • Does it include home health, assisted living, and nursing home care?

   • Are there daily or monthly maximums?

2. What are the benefit triggers?

   • Most policies require that you cannot perform 2 of 6 Activities of Daily Living (ADLs) — like bathing, dressing, or eating — or you have cognitive impairment.

3. What’s the elimination period?

   • This is like a deductible in time. A 90-day elimination period means you pay out of pocket for the first 90 days before insurance kicks in.

4. How long will benefits last?

   • Some policies pay for 3 years, others for 5 years, and some for life.

5. Is there inflation protection?

   • A $200/day benefit today won’t go far 20 years from now. Look for at least a 3% compound inflation rider.

6. What’s excluded?

   • Pre-existing conditions, mental health issues, or certain illnesses may be excluded.

3. How Much Coverage Do You Really Need?

This is where Dave Ramsey principles come into play. Don’t over-insure, but don’t under-protect either. A balanced approach is best:

• Home health: You may want to stay home as long as possible.

• Assisted living: Growing in popularity, often fully covered by mid-tier policies.

• Nursing home: The most expensive, and where costs can exceed your daily benefit.

👉 Pro Tip: Think of LTC insurance as cost-sharing with your future self. You don’t need to cover 100% of expenses — you need to cover enough so your retirement savings aren’t wiped out.

4. When Should You Buy Long-Term Care Insurance?

• Too early (40s–50s): Premiums may feel like wasted money if you won’t use it for decades.

• Too late (70s+): Health issues can disqualify you or make premiums sky-high.

• Sweet spot: Mid-to-late 50s to early 60s — before health problems appear, but late enough to avoid decades of premiums. Dave has was taught to buy at 60!

5. Today’s Market Trends You Need to Know

• Hybrid Policies: Combine life insurance with LTC benefits. If you don’t use the LTC, your heirs get the death benefit.

• Rising Premiums: Traditional policies are pricier than ever, and some insurers have left the market.

• State Programs: Some states (like Washington) are creating mandatory LTC payroll taxes, pushing residents to buy private coverage.

• Benefit Pool vs. Daily Limit: Most modern policies now use a benefit pool — you get a total dollar amount to spend across settings, giving you flexibility.

6. Steps to Take Before Purchasing

1. Assess Your Family Health History: Alzheimer’s? Stroke? This helps gauge your risk.

2. Review Your Financial Picture: How much could you self-insure? How much risk do you want to transfer?

3. Shop Around: Get quotes from at least 3 carriers. Look at company strength ratings (A.M. Best, Moody’s).

4. Work With a Trusted Pro: Find an independent agent who isn’t tied to one company.

5. Pray and Plan With Your Family: LTC affects more than just money — it impacts your loved ones’ time and stress.

Final Thoughts

Long-term care insurance isn’t cheap, but neither is the alternative. As Dave Ramsey teaches: “Insurance is there to protect your wealth, not grow it.”

The right policy:

• Keeps you from draining your retirement accounts.

• Gives your family peace of mind.

• Provides flexibility in how and where you receive care.

Buying long-term care insurance may be one of the most important financial decisions you’ll make in your 50s or 60s. Do your homework, ask the tough questions, and choose a policy that balances cost and coverage. I would suggest one of two resource options. One, contact Zander Insurance which has been a Ramsey sponsor for decades. Two, Dave has vetted agents in your area that can help. Go to https://www.ramseysolutions.com/insurance to find not only all the information you need about ANY insurance, but you can find a trusted agent.

👉 Next Step: At 2nd Round Financial, I help families think through these decisions. Want a personalized guide to whether LTC insurance is right for your situation? Feel free to contact me 2ndRoundFinancial@gmail.com

Disclaimer: This content is for educational purposes and not individualized insurance, tax, or legal advice. Consult licensed professionals before purchasing or modifying coverage..