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Long Term Care Insurance: Pros and Cons Breakdown

Published April 8, 2021

5 minute read

David Ning

By David Ning

Before my aunt passed away, she was in need of constant care for her last couple of months. My uncle decided to put her in a nursing home, where all of her needs would be met by medical professional. It was a hugely expensive choice, especially since my aunt was place in a very nice facility with a private room. The costs can add up very quickly. Truthfully, the only reason she was able to get such good care was because my aunt and uncle had purchased long term care insurance. If they hadn’t, I’m not sure my uncle would have been able to afford to send my aunt to such a place. It would have been a huge extra stress on him, especially financially. In this article, we’ll go over all the pros and cons of long term care insurance.

Will You Need Long-Term Care Insurance?

The realities of life are starting to catch up with many of us. First of all, we are living much longer. It’s not unheard of for someone my age to live well into their 90s. By the time I get to that age bracket, living to your 90s (and beyond) could even be the norm. This longevity means that it might be necessary to have the resources to live for more than 30 years beyond retirement. As a result of this reality, it’s estimated that most people will spend at least some time in a long-term care facility. This could mean an assisted living community or a nursing home.

According to data from the National Study of Long-Term Care Providers, the average length of stay in nursing homes is 485 days. That may not sound like a long time. However, the average is heavily skewed due to the many people being covered through Medicare. They are only staying at those facilities to recover for an average of 23 days, since Medicare coverage is often very limited. If you take those data points out and only count residents who are in there for the longer haul, the average stay jumps up to over 800 days.

Speaking of Medicare, the government only currently covers a maximum of 100 days of skilled nursing stay. It must follow a recent hospitalization for the same (or related_ condition. It’s safe to say that you can’t rely on this program for your needs retirement healthcare needs. If you need long-term care at some point in your life, you need to be prepared for it. Will you have the financial resources to cover this care? Long term care insurance might be the answer.

Long Term Care Insurance Can Make Sense

Maybe you don’t want to watch your money dribble away in facility fees. Or maybe you simply can’t afford to send yourself (or your loved ones) to a facility that meets standards. After all, everyone’s expectations and idea of comfort is different. If you’re in these situations, it probably makes sense to purchase long term care insurance. This insurance is designed to pay for long-term care once you need it. You make your premium payments based on a daily payout (there might be a lifetime payout cap). Then, when you’re actually in a facility, the insurance covers a majority of the costs. That way you won’t deplete your nest egg. Nor will you bankrupt your family as they attempt to care for you.

You might be surprised to learn that you can actually get reimbursed for care even if you never enter a nursing home. Generally, long term care insurance also pays for care when you have a chronic illness. It doesn’t matter if you need a wheelchair to move around, have Alzheimer’s, or are bedridden. It also doesn’t even matter where you need this care. You could be in a nursing home, day care, assisted living facility, or even in your own house. If you have extra medical long term care medical expenses, insurance can help.

Your premiums may even be tax deductible. For 2020, those who are 40 and under can deduct as much as $430 in long term care premiums. This amount jumps to $5,430 for those 70 and over. This means that a couple who are both 70 could deduct as much as $10,860 from their taxes. You just have to itemize the deductions and ensure your total medical expenses exceed 7.5% of your adjusted gross income.

Check all the fine print of your policy before you sign on the dotted line. However, don’t write off getting a long term care policy just because you swear you’ll never step foot in a nursing home.

Pitfalls of Long-Term Care Insurance

It’s also important to watch out for the pitfalls of long-term care insurance. Not all policies are created equal. You need to make sure that you are getting the best policy for your needs. Watch out for caps on coverage and payouts. Be aware of what types of facilities the coverage will allow. Some policies will pay for high-end facilities, but others will not. You don’t want to be stuck in the cheapest, oldest facility in town because your insurance doesn’t cover anything else.

Different policies can have different elimination periods as well. This is the period where policy holders are required to make payments before the coverage will kick in. Think of it like the deductible on car insurance. The shorter the elimination period, the better the policy. Make sure that you understand the policy provisions before you sign your name and begin making any payments.

The Bottom Line

You can get the help of a financial planner as you choose your long-term care insurance. Choose a financial professional who isn’t getting paid based on the commission of recommending certain policies. You want to make sure that your policy options are evaluated on a basis that is fully in your favor.

With the right long term insurance care policy, you can save money for yourself and your family. I know that the long term care policy brought peace of mind to my relatives. It was a great help during a difficult time. It made focusing on the needs of my aunt possible, rather than adding stressful financial worries to the situation.

Long Term Care Insurance


David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs, where he discusses every day money issues to encourage the masses to think about their finances more often.

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