- A+ rating by A.M. Best.
- Includes cash benefit option and waiver of premium.
- Several optional riders are available.
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Anyone whoโs supported an ailing parent or loved one understands the many challenges of providing long-term care. Even in relatively good circumstances, providing care can be physically, emotionally, and financially draining.
Long-term care (LTC) insurance can alleviate some of this burden. Itโs a type of insurance that covers the cost of services not typically covered by private health insurance, Medicare, or Medicaid. This can include professional assistance with daily living activities such as bathing, dressing, and eating. Such services may take place in the individualโs home, in assisted living facilities, nursing homes, or in other types of professional care settings.
LTC insurance varies based on the insurer and type of policy. Coverage may be available as a standalone policy or combined as a hybrid policy that includes life insurance. Some policies may limit the type of care covered, while others are much more comprehensive and provide several customization options.
It can be difficult (as weโve discovered in preparing this review) to find coverage details online. A financial advisor or independent insurance agent who offers LTC insurance may be a helpful resource in your search.
Standalone
79
5 years
$10,000
Mutual of Omaha is a major insurance provider with an A+ rating from A.M. Best. The company offers standalone LTC insurance. Its policy includes several benefits, including the option to receive a portion of the payout as cash and a waiver of premium while youโre receiving covered services.
Mutual of Omaha also offers several optional riders, including shared care, which allows you to access some of the benefits of a spouse/partnerโs policy if youโve exhausted your benefits.
The Mutual of Omaha website offers helpful online tools, including calculators to help you estimate the cost of care as well as the cost of coverage. Policies are sold by local agents, but the website does have an agent finder tool.
Hybrid
75
7 years
$20,833
Based in Columbus, Ohio, Nationwide provides numerous insurance types, from auto and homeowners to business and life. A.M. Best rates the company's financial strength as A.
Nationwide offers a hybrid policy called CareMatters. As a hybrid, it provides both life insurance (a universal life insurance policy) and LTC benefits. Premiums are stable across the policy's life. The company touts flexibility as one of the main advantages of its product. You can customize how payments are structured and how long LTC benefits will be received. You can also add an option that adjusts your LTC benefit to account for inflation.
CareMatters also pays benefits to you in cash to use as you see fit rather than reimbursing you after the fact based on submitted receipts. And if you never use the LTC portion of the policy, your beneficiaries will still receive a death benefit upon your passing. Nationwide CareMatters is sold by the companyโs agents.
Standalone, Hybrid
79
6 years
$12,000
Northwestern Mutual is the countryโs largest life insurance company and a provider of LTC insurance. It has an A++ rating from A.M. Best, which is the highest rating for financial strength and means you can be confident the company will be there for you if and when you file a claim.
Northwestern Mutual offers both standalone and hybrid policy types. The latter combines whole life with LTC coverage. The company also mentions the option of using a life insurance policy accelerated payout to pay for long-term care services but notes that doing so would lower the life insurance death benefit payout.
The company sells policies exclusively through its network of financial advisors and you can use its website to find one near you. The website, unfortunately, lacks any tools to help you get a rough estimate of costs.
Standalone, Hybrid
75
7 years
$7,000
New York Life is another U.S. life insurance giant that offers LTC insurance. Founded in 1845 and headquartered in New York City, the company has an A++ rating from A.M. Best, the highest financial strength rating possible.
New York Life offers multiple versions of its standalone LTC policy, each with multiple coverage levels. Additional riders can be added to further customize coverage. The company also offers a hybrid policy called Asset Flex, which combines whole life and LTC coverage.
While New York Life does not offer coverage estimating tools, it does do a nice job of outlining its many policy options, coverage levels, and optional riders on its website. Policies are sold through local agents. On New York Lifeโs website, thereโs a form that you can fill out and submit to have an agent contact you.
Based in Minneapolis, Minnesota, and Appleton, Wisconsin, Thrivent provides life, disability, and LTC insurance, along with investments and other financial services. The company is rated A++ by A.M. Best, which is the credit rating agencyโs highest grade
for financial stability.
Thrivent offers standalone LTC insurance with various included benefits and optional riders. The company also offers multiple discounts, including a 20% discount if you and your spouse or partner are approved for coverage and a 10% discount if youโre in good health.
Policies are sold through agents and the company does not offer online quotes. However, Thrivent provides a handy online worksheet to help you understand your LTC coverage needs and options.
Company | Policy types | Maximum issue age | Maximum benefits period | Maximum coverage (monthly) |
---|---|---|---|---|
Mutual of Omaha | Standalone | 79 | 5 years | $10,000 |
Nationwide | Hybrid | 75 | 7 years | $20,833 |
Northwestern Mutual | Standalone, Hybrid | 79 | 6 years | $12,000 |
New York Life | Standalone, Hybrid | 75 | 7 years | $7,000 |
Thrivent | Standalone, Hybrid | 79 | 8 years | $15,000 |
We reviewed LTC coverage options from several leading U.S. providers. Where possible, we relied on each insurerโs website for information about policies, coverages, riders, and other features, though some details are from third-party reviews. Our โchoiceโ selections are based on standout features provided by these companies.
While weโve made every effort to ensure accuracy, we recommend that you verify these companies' offerings directly.
LTC insurance is a type of coverage that can help you pay for a wide range of services needed if you can no longer perform one or more activities of daily living (ADL). ADLs typically include bathing, dressing, eating, transferring (moving from one position to another), toileting, and continence.
An LTC policy may cover these services in various settings, such as your home, a nursing home, an adult day care center, or an assisted living facility.
LTC insurance offers benefits typically not provided by private health insurance or public programs such as Medicare or Medicaid. Itโs intended to help families manage the significant costs of caring for a loved one who needs constant supervision.
The average cost of an LTC insurance policy for a 55-year-old man with $165,000 of coverage is $900 per year. The average cost of the same policy for a 55-year-old woman is $1,500. These figures are from the American Association for Long-Term Care Insurance and are based on 2023 data.
For perspective, here are some average annual costs of long-term care services, according to a separate 2021 study:
If youโre relatively young, fit, and healthy, it can be difficult to grasp the need for long-term care. But losing the ability to perform common tasks is, unfortunately, a part of life for many people as they age.
In fact, a recent study by the Administration on Aging showed that 70% of Americans over the age of 65 will eventually require some form of care, either in their home by qualified service providers or in a professional facility. The average length of stay in long-term care is 3.2 years.
These figures underscore the breadth of individuals who could benefit from having LTC insurance.
LTC insurance works like many other types of insurance policies. You shop for and purchase a policy from a provider. You pay a premium to keep that policy in force. Then, when the policyโs benefits are needed, you file a claim with the insurer. The insurer will review your request and approve the claim if it meets certain criteria set forth in the policy contract, which you receive and agree to when you purchase the policy.
With an LTC policy, these criteria are called โbenefit triggers.โ These triggers typically include a demonstrated need for assistance with any of several activities of daily living (ADL), including:
An LTC insurance claim payout is thus intended to help you pay for professional services to assist with these ADLs. This assistance may occur in your home, an assisted living facility nursing home, an adult day care center, or another setting.
LTC policies typically have a waiting period (sometimes called an elimination period), during which you must pay for these services out of pocket; the policy begins paying once the waiting period is over. Waiting periods commonly range from 30 to 90 days.
You may be able to choose this length when you buy the policy. Just be aware that, with all other things equal, a policy with a shorter waiting period will cost more in premium than a policy with a longer period.
Policies typically have a maximum daily and lifetime payout that limits how much theyโll pay for services.
There are two primary types of LTC insurance, as follows:
A traditional LTC insurance policy works as described above. You pay a premium to keep the policy in force. Once certain criteria are met, you can file a claim to receive the policy benefits.
A hybrid policy combines the benefits of long-term care insurance and life insurance. The policy includes coverage for LTC services and pays a death benefit to the policy beneficiaries after the insured person passes away.
Individuals have other ways to fund their long-term care expenses beyond the traditional and hybrid types of LTC insurance.
Many life insurers offer optional long-term care riders. These riders add coverage that allows you to access a portion of the policyโs death benefit to pay for long-term care services.
A short-term care policy works similarly to a traditional LTC, exceptโas the name impliesโbenefits are paid out for a shorter period.
Some employers offer LTC insurance as an employment benefit, similar to group health or life insurance. Policies may be available at little to no cost to you (the employee), making it a cost-effective alternative to a traditional LTC policy.
A growing number of states now offer long-term care partnership programs. These programs allow you to collect LTC insurance payouts without worrying about Medicaid asset paydown requirements. In other words, you can buy and benefit from LTC insurance while still qualifying for Medicaid.
These partnership programs were designed to help people plan for their long-term financial needs.
Several factors affect the cost of LTC insurance, including the following:
Because women live longer on average than men, they can expect to pay more for LTC insurance.
Younger, healthier individuals can expect to pay less for LTC insurance than older people with chronic health issues.
Married people usually pay less for coverage than single people.
As with any type of insurance, the more coverage you have, the more the policy will cost. A policy with higher daily and lifetime maximums, shorter waiting periods, and optional riders will cost more than a policy without these features.
LTC insurance can help provide peace of mind that the need for professional long-term care services wonโt be financially ruinous. But LTC insurance is optional, and anyone considering buying coverage should be familiar with its pros and cons.
*Consult with a qualified tax preparer for more information.
Follow these tips when shopping for and buying LTC insurance.
As with most types of insurance, LTC policy features and costs vary from company to company. Check with at least three or four providers to ensure you get the coverage you need at the best price.
Moreover, as you check with various companies, be sure you understand their coverage options, including waiting periods and payout maximums, riders, and any other options. Review policy terms and conditions carefully.
If youโre also in the market for life insurance, find out what companies offer hybrid policies or LTC riders. You may be able to get all the coverage you need from a single provider.
An insurerโs financial strength isnโt just academic. Buying from a company that does an excellent job of managing its balance sheet means you can have greater confidence theyโll be there for you when you have a claim.
As mentioned earlier in this article, LTC insurance is costly and complex. Consider reaching out to an independent insurance agent or financial advisor for help. Such a professional can help you get the coverage you need at a price that suits your budget.
Itโs an unfortunate truth that, as we get older, many of us will lose the ability to take care of routine tasks such as eating and bathing. Long-term care services, provided by professional caregivers either in homes or in qualified facilities, offer this support and LTC insurance can help alleviate the financial burden of paying for those services.
Deciding whether LTC coverage is worth buying requires evaluating several factors, including your financial situation and preparedness for long-term care expenses, your probable healthcare needs, whether you have family that could provide support, and your personal preferences.
Itโs not uncommon for LTC insurance premiums to increase as you age. This is due to your likelihood of needing care as you age and the insurerโs need to continue charging premiums that reflect their cost of doing business.
LTC insurance age maximums vary by company. However, itโs usually possible to get coverage into your 70s. Two of the companies in our review offer coverage up to age 79.
Your LTC insurance premiums may be tax deductible depending on the type of policy, your age, and your medical expenses. See IRS publication 502 or talk to a qualified tax preparer for more information.
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