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LIFE Insurance

About half of those who reach the age of 65 will eventually need long-term care. Whether they can afford that care is questionable. LIMRA recently said that 53% of Americans surveyed are worried about whether they can afford long-term care.

About half of those who reach the age of 65 will eventually need long-term care. Whether they can afford that care is questionable.

LIMRA recently said that 53% of Americans surveyed are worried about whether they can afford long-term care.

In the past, people turned to long-term care insurance as a way to provide for that time. However, over the past decade, combination life insurance has become the norm.

Who pays for long-term care usually?

Medicare usually doesn’t cover long-term care. Medicare covers your medical expenses, but when it comes to long-term care, you’re generally on your own.

One exception is people who qualify for Medicaid. Medicaid will pick up a portion of the costs of long-term care.

However, if you don’t qualify for Medicaid, you’ll need to figure out a way to pay for long-term care. That could result in your family selling your home to help pay for nursing home care.

Long-term care can cost thousands a month.

  • Assisted living facilities usually cost more than $3,600 a month.
  • Nursing homes can cost $8,000 a month.
  • Home care varies by the level of care needed, but it can cost even more than a nursing home depending on the care.

Most long-term care insurance claims are for home care. That’s especially true for a person’s first long-term claims, according to the Association of Long-Term Care Insurance .

First long-term claims by source:

  • Home care -- 52%
  • Assisted living -- 25%
  • Nursing homes -- 23%

Final long-term care claims by source:

  • Home care -- 43%
  • Nursing homes -- 30%
  • Assisted living -- 27%

When can you use long-term care protection?

You can’t just say “I’d like to use my long-term care protection now” and then get money.

A doctor must diagnose you with cognitive impairment or deem you incapable of performing at least two of six daily living activities:

  • Bathing
  • Continence
  • Getting dressed
  • Eating
  • Toileting
  • Transferring (moving to and from a bed or a chair)

Once a doctor signs off, you’re able to submit claims for your long-term care.

People might think of long-term care as something that happens to people in their 90s, but it can start sooner than you think.

The American Association for Long-Term Care Insurance said that almost one-third of long-term care claims are for people 80 or younger.

Long-term care usually pays a certain amount depending on the claim. It could be per day for services or it might be per month depending on the care.

Once you get the OK for long-term care insurance, you, your family or your representative can file claims.

What is long-term care insurance?

Long-term care insurance provides funding for long-term care. Longtermlife

The bad news is that there are only a handful of companies that still offer long-term care insurance. If you’re able to find a policy, you’ll pay a lot more than someone a decade ago.

The Association of Long-Term Care Insurance said there were more than 350,000 policies purchased in 2018. A whopping 84% was combination life insurance. Only 16% were traditional long-term care insurance policies.

Fewer than 100,000 people purchase long-term care insurance annually. That’s down from 750,000 in 2002.

Only about a dozen companies still provide new long-term care insurance policies. A decade ago, there were more than 100.

The reason why fewer companies offer long-term care insurance comes down to costs:

  • People are living longer while getting long-term care. That means more money being paid out by insurers.
  • Fewer people are buying long-term care policies, which means fewer dollars helping pay for those collecting benefits.

Insurers paid out $10.3 billion in long-term care claims in 2018 for more than 330,000 claimants. That’s an increase from $8.14 billion for 260,000 claimants in 2015.

How do you get long-term care insurance?

Getting long-term care insurance isn’t as easy as a decade ago. Fewer insurers mean there aren’t many to compete for your business. That can lead to higher rates.

You’ll also need a medical exam. The insurer will decide whether you’re a risk.

Younger people have a better shot at getting approval. Only 20% of people under 50 got denied for a long-term care plan in 2017. That’s compared to 44% of people in their 70s and 30% of those in their 60s, said the American Association of Long-Term Care Insurance.

How much does long-term care insurance cost?

Long-term care policies cost a lot more than a decade ago. State regulators are concerned about the rising costs, but insurers argue the rate increases are needed to help the changing market.

Specific long-term care insurance rates vary by age, health, level of benefits and insurer. Here are 2019 annual premiums for a $164,000 policy, according to the American Association for Long-Term Care Insurance:

  • Single male, age 55 -- $2,050
  • Single female, age 55 -- $2,700
  • Couple, age 55 -- $3,050

What to do if you have an expensive long-term care insurance policy?

People faced with rising long-term care insurance have options:

  • Keep the policy and pay the higher rates.
  • Talk to your insurer about other options. Alternatives include reducing the daily rate you’d get for long-term care or cutting the inflation rate on the policy, which means you’ll have a smaller payout.
  • Drop long-term care insurance and lose the money you paid into it.
  • Drop your policy and get one with a smaller payout.
  • Drop your policy and get a combination life insurance policy.

Combination life insurance could be an option if they’re eligible for a permanent life insurance plan. This will likely mean having a medical exam.

What is combination life insurance?

Combination life insurance is a permanent life insurance policy with a long-term care insurance rider.

This rider allows you to tap into your long-term care savings if you need it. You don’t pay taxes on it. If you don’t use it, the money will go toward a death benefit.

You can add other riders to the policy like:

  • Accelerated death benefits
  • Disability income
  • Critical illness

Combination life insurance made up 27% of the total individual life insurance market last year. So, more than one-quarter of new life insurance policies have a long-term care rider.

Once a doctor signs off, you get a percentage of the overall death benefit for the insurance rider. An example is if you have a $200,000 life insurance policy and a rider for 3% a month for long-term care, you could tap into $6,000 a month for long-term care expenses.

How much does combination life insurance cost?

Combination life insurance isn’t cheap.

A combination life insurance policy may cost you $75,000 if you’re willing to pay one lump sum for the long-term care rider. It may cost more if you spread out the payments over a few years. So, it’s not usually an option for someone who doesn’t have money available.

How do you get combination life insurance?

Unlike long-term care insurance, many insurers offer combination life insurance.

If you already have a permanent life insurance plan, you can talk to your insurer about adding a long-term care rider or changing policies.

Since it’s a permanent life insurance plan, you can also add other riders to create a policy that works for you.

Once you find a policy for you, the insurer will likely ask a series of health-related questions and you’ll probably need a medical exam. The insurer will decide about approval and your rates by the answers to those questions and the exam.

Differences between long-term care insurance and combination life insurance

There are many differences between long-term care insurance and combination life insurance. Here are a few of them:

Life insurance

  • Combination life insurance provides permanent life insurance. Long-term care insurance is just that. Only for long-term care.


  • Combination life insurance is more expensive than long-term care insurance.
  • Long-term care insurance premiums increase as you age. Combination life insurance premiums are usually consistent.
  • You lose any money not spent on a long-term care insurance policy. An estimated 73% of long-term coverage ended with a death in 2018 and 14% when a person exhausted benefits.


  • Long-term care insurance usually has larger payouts than combination life insurance.

What long-term care plan is right for you?

It depends on your situation, finances and what you want out of your coverage.

Here are questions to ask yourself:

  • What do you want out of a policy? Do you just want long-term care coverage or the ability to transform that money into a death benefit?
  • How much money do you have to spend on a policy?
  • Do you already have life insurance or do you need a policy?
  • Do you have beneficiaries who need a death benefit?
  • Are you OK with spending higher rates for long-term care insurance as you age?

The answers to those questions will help you figure out what’s a better choice.

Then, your next step is to talk to a financial planner. Create budgeting and financial modeling to figure out whether you need long-term care protection.

If you feel you need it, shop around and get quotes from multiple companies. You may want to price both long-term insurance and combination life insurance to see which avenue makes sense for you.