What Is Long-Term Care Insurance?

[Last updated July 2, 2025]

Many adults consider purchasing long-term care insurance so that as they age, they can ensure that they can financially cover senior care services that traditional health insurance may not. These policies reimburse and cover care for older adults with various needs, such as long-term senior care services. Here are the basics of long-term care insurance and how older adults can plan for their future care needs.

What is long-term care insurance?

Long-term care insurance (LTCi) is a type of insurance policy that helps individuals pay for the long-term care they might someday need. This type of insurance covers various services for adults with medical and nonmedical needs caused by aging, disabilities, or chronic illnesses. Typically, LTCi will help cover the cost of care once the individual cannot perform at least two activities of daily living (ADLs) on their own. Activities of daily living include:

• Bathing.
• Dressing.
• Eating.
• Toileting or caring for incontinence.
• Transferring. 
• Ambulating.

Individuals may also be able to receive benefits for cognitive impairment. Depending on the policy, they may be able to receive care in their home or in a long-term care facility such as an assisted living facility.

How does long-term care insurance work?

Those interested in long-term care insurance can apply by filling out an application with a provider and answering health-related questions. As a part of the application process, applicants may need to provide insurers with their medical records. Applicants can choose the amount of coverage they want, with policies typically limiting the daily or lifetime amount paid for care. 

After the insurer approves and issues the policy, the insured will begin paying premiums for coverage. Once a person’s care needs meet the threshold stated in the policy, they should file a claim in order to begin receiving payments. This threshold is often set as requiring help with at least two ADLs. When they file the claim, their insurance provider reviews their medical documents and determines coverage. In some cases, the insurer may send a doctor or a nurse to evaluate. Certain third parties like ElderLife Financial Services can help individuals make a claim on their LTCi to fund senior care.

Types of long-term care insurance

There are three main types of LTCi: traditional stand-alone policies, hybrid policies, and life insurance policies with long-term care riders. Let’s take a closer look below.

Traditional (stand-alone) policies

Traditional LTCi policies work similarly to auto or home insurance. The insured pays premiums while the policy is in effect and will make a claim when they need covered care services. These policies will state how much reimbursement a person can receive for care daily or monthly. They also may have a lifetime maximum.

The individual typically receives these care services in their home, assisted living, a nursing home, or another medical facility. Premiums may be higher if the insured opts for benefit amounts that increase over time to protect them from inflation.

Hybrid policies

A hybrid or linked-benefit long-term care insurance policy offers coverage combined with additional benefits such as life insurance or an annuity. The policyholder pays a lump sum or divides it into regular payments for the long-term care coverage. The policyholder’s beneficiaries will receive some of the death benefits should the long-term care benefits go unused at the time of the insured’s passing. These policies are more expensive than stand-alone LTCi policies.

Life insurance with a long-term care rider

With this policy, the insured chooses to add long-term care benefits, or a long-term care rider, to their life insurance policy. The policyholder can access some of their death benefits from the life insurance policy to pay for long-term care if the need arises. Using a portion of the death benefits for care will decrease the amount paid out at the time of the individual’s passing.

How much does LTCi cost?

The cost of long-term care insurance varies based on many factors. Factors that determine long-term care insurance costs include:

• Age and health status: The older you are, the more likely you are to have health problems, which can increase the price of a long-term care policy.
• Gender: In most insurance policies, women may pay more than men. According to Jesse Slome, executive director of the American Association for Long-Term Care Insurance, “The long-term care insurance industry now has enough data that shows that women have a far greater chance of using their coverage,” as they have a greater life expectancy. This can lead to higher premiums.
• Marital status: Insurance premiums are lower for married people than for single people.
• Insurance company: Different insurance agencies will offer higher or lower prices and cover different levels of care. Research and compare quotes when considering policies.
• Amount of coverage: Insurance plans that offer more coverage will cost more. Increased coverage can include higher limits on daily and lifetime benefits, cost-of-living and inflation adjustments, shorter elimination periods (the amount of time a person must wait between filing a claim and receiving benefits), and fewer restrictions on the types of care covered.

Is LTCi tax deductible?

LTCi can be tax deductible. The federal government and some state tax codes allow policyholders to count a portion or all of their insurance premiums as medical expenses, which can be tax deductible if they meet a certain threshold. The limit on how much of the premium can be deducted increases with age.

Is LTCi worth it?

In short, the answer to the question of whether long-term care insurance is worth it is that it depends. 

A long-term care insurance policy can protect a person’s savings from being depleted by paying for care out of pocket. Paying for long-term care yourself can quickly deplete retirement savings, leaving no money for alternatives. Having a policy also gives those insured better access to quality care. Those who rely on Medicaid have more limited options than long-term care insurance policyholders who get coverage through their insurance.

However, many LTCi policies operate on a use-it-or-lose-it basis, meaning that if an individual never requires care, they won’t receive any financial benefit. Individuals should assess their financial, personal, family, and health considerations to determine if LTCi is worth it for their individual situation.

Here’s what to consider when making your decision:

• Your age and health: Can you still qualify for a reasonable rate?
• Your assets: Can you pay for care out of pocket?
• Your care preferences: Do you want professional care, or do you prefer help from your family?
• Your support network: Is your family able to provide care, or will you need to hire outside services?
• Your risk tolerance: Are you comfortable betting that you won’t need care, or would you rather insure against it?

How can I buy long-term care insurance?

You can buy long-term care insurance from several reputable providers, including insurance companies and agents. Some employees may be able to buy policies through their jobs, as employers may offer coverage through a group rate.

[Read more: Top Long-Term Care Insurance Providers]

When should I buy long-term care insurance?

The best time to purchase LTCi is between the ages of 50 and 65. When deciding if it’s time to buy long-term care insurance, consider these factors: 

• Current financial condition and financial goals.
• Age and health, including preexisting conditions.
• Other insurance options that might be a better fit.
• Amount of coverage needed.

What might disqualify me from long-term care insurance?

Insurance providers may deny individuals coverage due to health reasons, like preexisting conditions, as well as income. A person with certain preexisting health conditions may not qualify for a long-term care policy. Insurance agencies also need proof of income or finances to confirm that the individual can pay for the policy.

Why long-term care insurance matters

Long-term care insurance can play an important role in helping older adults protect their finances and secure quality care as they age. While it may not be the right choice for everyone, understanding the different types of policies, costs, and eligibility factors can help individuals make informed decisions about planning for future care needs. By carefully weighing their personal health, financial situation, and care preferences, adults can decide if investing in LTCi aligns with their goals and will provide peace of mind for their later years.

Are you considering investing in a long-term care plan? The financial concierges at ElderLife Financial can provide guidance and show you your options for long-term senior care. ElderLife Financial can also help you make a claim on your long-term care insurance policy to access the money you need. Contact us today to learn how we can support you.