Long-Term Care Insurance Considerations

Considerations for Purchasing Long-Term Care Insurance

  • Culled from a variety of readily-available sources
  • Source abbreviations defined below
Area of Advice
Other Considerations
Purchase At What Age
Age 40 and certainly by age 65. (CU)
Daily Benefit Amount
Find out what long-term care costs in your area to help determine the base amount. (AARP, NAIC)
Consumer need not buy insurance that covers the full cost of care since some long-term care is financed by Medicare. (CMS)
Benefit Trigger
Limits in two ADLs and that one of the ADLs used in the list should be a limitation in bathing. (CU)

Be sure that Alzheimer's disease is covered. (NAIC/HIAA)
Eligibility should be certifiable by policyholder's physician rather than someone chosen by the insurance carrier. (AARP)

Don't buy a policy that requires hospitalization or nursing home care or skilled nursing care in order to begin receiving benefits. (NAIC/HIAA; IMSA) Avoid policies that do not cover care received outside of the U.S. (LTCFEDS.COM)
Types of Services
In-home care and nursing home care should be covered. (AARP)

Alternative care facilities, like care at an assisted living facility should be covered. (CU)

Personal care and homemaker services (i.e. cooking, shopping) should be an option. (AHCA, NCAL, ElderLawAnswers.com)
Services covered should not be limited to skilled care. (NAIC/HIAA)

Home care benefit should include adult day care, hospice services and respite care. (CU)
Waiting Periods (Elimination period or deductible)
30 days (CU)
Buy a policy in which this is applied once, rather than for each episode of care. (AARP)
Length or Duration of Coverage
At least one year.
Four years. (CU)
Inflation Protection
Buyers should obtain a policy that automatically increases the benefit amount over time. (AARP)

For buyers age 70 or older, 5 percent annual increases should be sufficient and for younger buyers a compounded 5 percent benefit amount. (NAIC)
A 65 to 75 year old should consider buying a 6-year or lifetime benefit with simple inflation. Those ages 75 and older should buy a bigger daily benefit for as long a period as they can afford. (ElderLawAnswers.com)
Non-forfeiture of benefits if you should stop paying premiums
Highly Recommended. (NYSUT)
It adds to the cost, but you should consider it. (CU)
Waiver of premiums while receiving benefits
Yes. (NYSUT)
Make sure there are no restrictions while receiving benefits. (HIAA)
Other provisions
Find a policy that provides an ability to increase or decrease coverage. (NYSUT)
The right to change the benefit should be guaranteed without providing evidence of insurability. (NAIC/HIAA)
Possible Variations
"Return on Premium" rider

LTCI Hybrid Policies
Once the policy has been in force for a certain number of years - 10 years, most likely - the insurer would return a portion of premiums paid if the policy were never used.

A relatively new product. These products are similar to the long-term care annuity, but instead of linking long-term care coverage with an annuity the insurer might use a life insurance product.
How much should you spend on long-term care insurance?
No more than 7 percent of annual income. (USHC)

Not more than 5 to 10 percent of income. (ElderLawAnswers.com)
If the premium is a concern, it is better to purchase a 2-year policy with inflation protection than a longer term policy without inflation protection. (CMS)

Check with your state's insurance department to learn how rate increases are regulated. (NAIC)
Financial Strength of Insurer
Rated in one of the top two categories by at least two rating services (such as A.M. Best, Moody's Investor Services, Fitch Ratings or Standard & Poor's) and have no low ratings. (NYSUT)
Weiss financial safety rating of at least a B+. (CU)
Insurer Reputation
Insurance company is a member of the Insurance Marketplace Standards Association.

Agent Commission
Consumers should know how their agent is paid. (CU)
Be sure the commission amount is within reason. (NYSUT)

Abbreviations / Resources

  • AARP
  • ACLI - American Council of Life Insurers
  • AHCA - American Health Care Association
  • AHIP - America's Health Insurance Plans (Same as HIIA)
  • CAHICAP - California Health Advocates (CA HICAP Association)
  • CMS - Centers for Medicare and Medicaid Services
  • CU - Consumers Union
  • HIAA - Health Insurance Association of America (Same as AHIP)
  • IMSA - Insurance Marketplace Standards Association
  • NAHU - National Association of Health Underwriters
  • NAIC - National Association of Insurance Commissioners
  • NCAL - National Center for Assisted Living
  • NYSUT - New York State United Teachers
  • OPM - Office of Personnel Management
  • USHC - United Seniors Health Cooperative
  • ElderLawAnswers
  • Office of Personnel Management


Choosing a Long-Term Care Insurance Policy: Understanding and Improving the Process, Robert B. Friedland and Stephanie E. Lewis; Center on an Aging Society, Health Policy Institute, Georgetown University.