Cost of Long-term Care Insurance by Age: Key Insights & Statistics

What is Long-Term Care Insurance?

Long-term care insurance is a healthcare policy designed to cover the costs of services needed by individuals who cannot perform basic activities of daily living due to age, illness, or disability.

Long-term care insurance policy, offered by various insurance companies, helps pay for care provided in nursing homes, assisted living facilities, or even in-home care. 

Unlike standard health insurance, long-term care insurance specifically addresses the need for extended care services, often not covered by Medicare or traditional health plans, ensuring financial protection against the high costs of long-term care.

What Is the Best Age to Buy Long-Term Care Insurance?

The best age to buy long-term care insurance is typically between 50 and 65 years. Purchasing a policy during these years, much like life insurance, can result in significantly lower premiums and a higher chance of approval. 

Individuals in good health who do not yet require long-term care services should consider purchasing coverage as early as possible to lock in better rates.

According to the American Association for Long-Term Care Insurance, individuals who purchase long-term care insurance at age 50 pay about 40% less premiums than those who wait until age 60. 

This can lead to substantial savings over time, making early enrollment a wise financial decision.

What Does Long-Term Care Insurance Cover?

Long-term care insurance helps cover the cost of care needed due to chronic illness, disability, injury, or the general effects of aging. This could include care in a nursing home, assisted living facility, or home care setting, where loved ones may also be involved in providing support. 

The policy may also cover services like skilled nursing care, as well as physical, occupational, or speech therapy. Additionally, it assists with daily activities, such as dressing, bathing, or transferring from one place to another.

However, it’s important to note that long-term care insurance typically doesn’t cover medical care, such as doctor visits, hospital stays, or adult day care services. Other options like Medicare, Medicaid, or private health insurance can help offset those expenses.

What Is the Average Cost of Long Term Care Insurance

The cost of long-term care insurance can vary widely based on several factors, including age, gender, and the specific policy you choose. On average, premiums increase as you age, with men and women facing different pricing. 

Understanding how these costs differ can help you plan better for future healthcare needs and secure a more affordable policy earlier in life.

Average Cost of Long-Term Care Insurance by Gender

• For 55-Year-Old Men:
  • A 55-year-old man typically pays around $950 annually for a policy with $165,000 in benefits.
• For 55-Year-Old Women:
  • Women face significantly higher premiums. For the same policy, a 55-year-old woman could pay $1,500 annually, a difference of $550 more than men.
• Premiums Increase with Age:
  • By age 60, average annual premiums rise:
    • Men: $1,175
    • Women: $1,800
  • By age 65:
    • Men: $1,700
    • Women: $2,200

The steepest increases happen between ages 65-75, especially for women.

A 60-year-old woman may pay $425 monthly for long-term care insurance, which increases to:

• $524 at age 65
• $966 at age 75
• $1,396 at age 79 (More than triple the cost of coverage at age 60)

Average Cost of Long-Term Care Insurance by Region

When considering long-term care insurance, premiums can vary significantly depending on where you live. For a 60-year-old male, the monthly premium for a policy with $4,100 per month in coverage differs across states. 

In Illinois, the monthly premium is $202, while in New York, it rises to $218. In California, the premium is higher at $249 per month.

How Long-Term Care Costs Increase with Age

However, the biggest factor influencing the cost of long-term care insurance is age. According to AALTCI, the average yearly premium increases as you get older. It goes from $950 at age 55, to $1,175 at age 60, and $1,700 at age 65. 

Mutual of Omaha’s estimator shows even higher increases. For instance, in California, a 60-year-old man’s monthly premium of $249 rises to $313 at age 65, $543 at age 75, and $676 at age 79.

For women, these increases are even more dramatic. A 60-year-old woman could expect to pay $425 monthly, which rises to $524 at age 65.

By 75, the premium soars to $966 per month, and by 79, it reaches $1,396, more than triple the cost of coverage at age 60.

Factors to Consider When Purchasing Long-Term Care Insurance

When considering long-term care insurance, there are several important factors to evaluate to ensure you choose the right policy for your needs. 

These factors can impact both the cost and the coverage you receive. 

Eligibility

As the population ages faster than ever before, with 10,000 Baby Boomers turning 65 every day until 2030, the need for long-term care is growing significantly. In fact, 7 out of 10 people will require long-term care in their lifetime. 

To qualify for long-term care insurance, most policies require you to experience either a cognitive impairment or difficulty performing two or more of the six Activities of Daily Living (ADLs), which may also include the need for a caregiver. 

The National Association of Insurance Commissioners (NAIC) defines these activities as bathing, continence, dressing, eating, toileting, and transferring (such as moving from a bed or chair).

While there’s no strict age requirement to apply, experts, including the American Association for Long-Term Care Insurance (ALTCI), suggest applying in your 50s to ensure you’re not declined due to existing health conditions. 

Waiting until you need coverage may make it too late, as certain age-related conditions like Alzheimer’s disease may disqualify you. Additionally, applying for a long-term care insurance policy while in good health often qualifies you for lower premiums and discounts, even if your health changes later. 

Duration of Benefits

Long-term care (LTC) policies are generally sold with coverage for 12 months or more, though the duration can vary based on your needs and budget. You can choose a policy that provides benefits for as little as one year or opt for coverage lasting 2, 3, or 5 years. However, most insurers have stopped selling policies that provide lifetime benefits. 

The premium you’ll pay depends on several factors, including the duration of coverage, your age, gender, benefit amount, and other individual factors. Additionally, some policies may be linked to annuities, providing a way to fund long-term care while growing your investment. Generally, the longer the coverage, the higher the premium. 

Inflation Protection

As long-term care costs continue to rise, adding inflation protection to your policy can be an essential feature to consider. In fact, the cost of long-term care services has been rising significantly over the years. 

According to the 2023 Cost of Care Survey by CareScout, the average annual cost of a private room in a nursing home is over $100,000, with some locations seeing increases of more than 4% per year. This means that without inflation protection, the benefits you’ve paid for could quickly become inadequate.

While it may increase your premium each year, inflation protection ensures that your benefits keep up with the growing costs of care. Without it, you might find that the coverage you’ve paid for becomes insufficient over time, leaving you with a gap in coverage when you need it most. 

Policies also come with an elimination period, the waiting time before benefits begin. Choosing a longer elimination period can lower your premium, but it also means covering care costs out of pocket for a set time. 

Most states require that long-term care insurance providers offer inflation protection, but the decision to include it is ultimately up to the policyholder. 

Bottom Line

The cost of long-term care insurance can vary significantly based on age, gender, and location, but purchasing a policy early is key to securing affordable premiums. As you age, premiums rise sharply, with men and women seeing different rates, women typically pay higher premiums. For example, a 60-year-old man in California might pay around $249 per month, while a woman of the same age could face costs of $425 per month. 

With the cost of long-term care continuing to increase, buying insurance early can lock in better rates, ensuring financial protection when you need it most.

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