Should You Buy Long-Term Care Insurance? What to Know Before Age 65

Should You Buy Long-Term Care Insurance? What to Know Before Age 65

Long-term care insurance sits in that uncomfortable category of financial products nobody wants to think about until it’s too late. Like estate planning or disability insurance, it forces us to consider scenarios we’d rather avoid. Yet this type of coverage addresses one of the biggest financial risks most Americans will face in their lifetime.

The decision about long-term care insurance isn’t just about money – it’s about maintaining control over your future care choices and protecting the financial security you’ve worked decades to build. While the premiums might seem expensive today, the alternative could be far more costly. Understanding what this insurance covers, when to buy it, and whether it makes sense for your situation requires looking beyond the marketing materials to understand the real-world implications of this important decision.

Key Takeaways

• Long-term care insurance covers assistance with daily activities like bathing, dressing, and eating.
• The optimal time to purchase coverage is between ages 55 and 65, before health issues arise.
• Medicare and regular health insurance provide limited long-term care coverage.
• Premiums increase with age, and many applications are declined after age 70.
• Women typically need care longer than men and pay higher premiums.
• Several alternatives exist for those who can’t afford or qualify for traditional coverage.

What Long-Term Care Insurance Actually Covers

Long-term care insurance pays for services that help people with daily activities when they can no longer perform them independently. This includes personal care like bathing, dressing, eating, and moving around safely. The coverage extends beyond basic physical assistance to include supervision for people with cognitive impairments like dementia or Alzheimer’s disease.

Most policies cover care in multiple settings. You can receive benefits for in-home care, adult day services, assisted living facilities, or nursing homes. This flexibility matters because most people prefer to stay in their own homes as long as possible.

The Economics Behind the Decision

The math on long-term care costs can be sobering. Private rooms in nursing homes average over over $100,000 annually in many parts of the country. Even in-home care can cost thousands per month depending on how much assistance you need. These expenses can quickly drain retirement savings that took decades to accumulate.

For a 55-year-old purchasing coverage today, annual premiums average between $900 to $1700 for single men and $1500 to $2700 for single women for a policy providing $165,000 in initial benefits. While these premiums aren’t small, they’re often less than what many people spend on car payments or dining out.

Why Timing Matters

Age plays a crucial role in both the cost and availability of long-term care insurance. Insurance companies use health questionnaires and sometimes medical exams to determine eligibility. The older you get, the more likely you are to have health conditions that make you uninsurable.

The sweet spot for applications falls between ages 55 and 65. During this window, most healthy people can still qualify for coverage at reasonable rates. Wait too long, and your options become limited.

The Medicare Gap

One of the biggest misconceptions about long-term care involves Medicare coverage. Medicare only pays for skilled nursing care following a hospital stay, and even then, only for a maximum of 100 days under specific conditions. It doesn’t cover custodial care, which makes up the majority of long-term care services.

Medicare also doesn’t pay for assisted living facilities, adult day programs, or most in-home care services. These gaps leave families responsible for covering costs that can easily exceed six figures annually.

Health Requirements Get Stricter With Age

Insurance companies become pickier about who they’ll cover as applicants get older. Conditions like diabetes, heart disease, or previous strokes can disqualify you entirely. Even minor health issues that wouldn’t affect your daily life today might prevent you from getting coverage.

Women face additional considerations. They typically live longer than men and are more likely to need extended care. Insurance companies reflect this reality in their pricing, charging women higher premiums for the same coverage.

Alternatives to Traditional Coverage

Not everyone needs or can afford traditional long-term care insurance. Some alternatives might work better depending on your situation. Hybrid life insurance policies with long-term care riders allow you to access death benefits while alive to pay for care. If you never need care, your beneficiaries receive the full death benefit.

Self-insurance through savings represents another approach. This works best for people with substantial assets who can afford to pay for care without insurance.

Key Features to Understand

Most long-term care policies include several important features. The elimination period acts like a deductible – you pay for care yourself for a set number of days before benefits begin. Common elimination periods range from 30 to 90 days.

Benefit periods determine how long the policy will pay out. Some policies offer coverage for two to five years, while others provide lifetime benefits. Daily or monthly benefit amounts set the maximum the policy will pay per day or month.

The Family Factor

Long-term care decisions affect entire families, not just the person needing care. Adult children often become caregivers, which can strain relationships and finances. Some families assume they’ll provide care themselves, but the physical and emotional demands can be overwhelming.

Having insurance coverage gives families more options. It can pay for professional care, reducing the burden on family members while ensuring quality care.

Making Your Decision

The choice about long-term care insurance isn’t purely financial – it’s personal. Some people prefer the peace of mind that comes with coverage, knowing they won’t burden family members with caregiving responsibilities or financial strain. Others would rather invest the premium money and take their chances with self-funding.

Consider your family health history, current financial situation, and personal preferences about care. If you have a family history of conditions requiring extended care, insurance might make more sense.

Work With Us

Long-term care insurance represents one of the most complex decisions in retirement planning, involving both financial calculations and personal considerations about your future care preferences. The timing of this decision matters enormously – wait too long and you may find yourself uninsurable, but buy too early and you’ll pay premiums for decades before potentially needing benefits. Understanding how this coverage fits into your broader financial strategy requires careful analysis of your specific situation.

At Avior, we help clients evaluate long-term care insurance as part of their comprehensive retirement planning strategy. We analyze your financial situation, health considerations, and family circumstances to determine whether this coverage makes sense for your goals. Our team can also explore alternatives like hybrid policies or self-insurance strategies that might better fit your needs. Contact us today to discuss how long-term care planning fits into your overall financial strategy and ensure you’re prepared for whatever the future holds.

Investment management and financial planning services are offered through Avior Wealth Management, LLC, an SEC-registered investment adviser. Tax and accounting services are provided by Avior Tax and Accounting, LLC, a wholly-owned subsidiary of Avior Wealth Management, LLC.

Insurance products, including life, disability, long-term care, and annuities, are offered through Avior Insurance. Insurance and annuity products are not offered through Avior Wealth Management, LLC, and are not covered by SIPC. Avior Insurance operates independently to provide insurance solutions tailored to clients’ needs. Insurance products are subject to the terms and conditions of the issuing carrier.

All information contained herein is general in nature and is not to be construed as specific investment advice. Avior does not provide legal advice. Clients should consult their own legal, tax, and financial professionals before making any decisions. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results.