Long-Term Care Insurance Basics Every Retirement Planner Should Know

What is long-term care insurance? How much does it cost? And, do I really need it?

Whether you’re thinking about retirement or just planning for the future, long-term care insurance can be a long-term game-changer. Let’s talk about the basics!

First, what is long-term care?

Long-term care refers to the various medical and custodial services provided to a person who is unable to perform basic activities of daily living and/or needs regular health monitoring. Long-term care can be provided at home, in assisted living, or in a nursing home.

How much does long-term care cost?

Well, that depends. According to Genworth’s Cost of Care Survey, the annual cost of long-term care can range anywhere from $20,000 to over $100,000. And, the costs are expected to keep rising.

long-term care costs table courtesy of Genworth: Financial Solutions — Courtesy of Genworth: Financial Solutions

Related: The Shocking Truth About Medicaid and Long-Term Care All 55+ Adults Should Know

So, what is long-term care insurance?

Health insurance rarely pays for costs associated with long-term care. Help with daily activities and mobility are a pretty big part of receiving long-term care. Your health insurance provider only wants to cover doctors and hospitals. So, that’s where long-term care insurance steps in. It’ll help cover custodial care, meal services, and housekeeping, as well as room and board if you reside in a facility.

Related: What Are The 3 Main Types Of Home Care?

How much does long-term care insurance cost?

The average cost is around $2,000 annually. A plan will begin to pay out benefits usually when a person is unable to perform two or more activities of daily living. For those concerned about paying for coverage they may never need, many insurance companies offer hybrid policies. Hybrids add a death benefit to your policy for cases where long-term care is never needed.

Is it worth it?

Sure, you have savings and a portfolio full of retirement investments. But, things come up. You or your loved one’s health can change in the blink of an eye. When faced with the unexpected, savings have a way of running out awfully quickly. And, if you want to protect your assets, a backup plan might just be the way.