How much does long-term care insurance cost?

Planning is an essential component when it comes to personal finance — and that's especially true when it comes to your senior years. After you're done working, it's important to have enough money saved up to maintain your lifestyle and cover any unexpected costs related to aging. Otherwise, you may have to make some tough financial decisions down the road.

But it isn't just about having enough money for retirement. As we age, the need for certain types of insurance coverage, like life insurance and Medicare supplemental insurance, increases drastically. And, so does the need for long-term care coverage. This type of insurance helps cover the various costs related to long-term care for a chronic medical condition, disability or disorder. 

While long-term care insurance premiums are an additional expense to factor into your budget, they can be worth it for many seniors. After all, a policy can offer peace of mind and financial security in the face of uncertain future healthcare costs. But just how much should you expect to pay for this type of policy? 

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How much does long-term care insurance cost?

The average cost of a long-term care policy with $165,000 in level benefits was $950 per year, or about $79 per month, for a 55-year-old single man in 2022, according to data from the American Association for Long-Term Care Insurance. And, a policy with the same level of benefits for a 55-year-old single woman averaged about $1,500 per year, or about $125 per month, during the same year. 

That said, it's important to note that the price of a long-term care insurance policy varies based on a range of factors, including the state you live in and your age when you enroll. And, something as simple as just a five-year difference in age can have a big impact on the cost of a long-term care insurance policy. 

For example, the price for the same policy increased to $1,175 per year, or about $98 per month, for a 60-year-old single man. That price jumped to $1,900 per year, or about $158 per month, for a 60-year-old single woman.

At age 65, the average single man would pay an annual premium of $1,700 per year, or about $142 per month, for the same policy, as of 2021. And, the average 65-year-old single woman would pay $2,700 per year, or about $225 per month, for that policy. 

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Factors affecting long-term care insurance costs

Here are some of the factors that could impact the price of your long-term care insurance policy:

Age at enrollment 

One of the most significant factors influencing the cost of long-term care insurance is the age at which you enroll. Generally, the younger you are when you purchase the policy, the lower the premiums will be. This is because insurers consider you to be at a lower risk of needing care in the near future.

For example, if you choose not to enroll at age 55 and instead wait 10 years to purchase a policy at age 65, your premiums will increase by an average of 49.9%, according to the American Association for Long-Term Care Insurance data. And, waiting 20 years increases your premiums by an average of 187.6%.

Health status 

Your current health status and medical history will also impact the cost of your long-term care insurance. If you have pre-existing medical conditions or a history of chronic illnesses, you may face higher premiums or be subject to exclusions and waiting periods.

Coverage amount and length 

The level of coverage you choose and the duration of your policy will directly affect your premium costs. Policies that offer higher daily or monthly benefits and longer coverage periods will naturally come with higher premiums.

Inflation protection 

Many long-term care insurance policies offer inflation protection to account for rising healthcare costs. While this feature can be essential for maintaining your coverage's real value, it will also increase your premiums.

Elimination period 

The elimination period, or waiting period, is the amount of time you must pay for your long-term care services out of pocket before your insurance coverage kicks in. Opting for a shorter elimination period will lead to higher premiums.

Gender

Historically, women have paid higher premiums for long-term care insurance due to their longer life expectancy and higher likelihood of needing care. However, some insurance companies have moved away from gender-based pricing.

Location 

Where you live can impact the cost of long-term care insurance. Prices vary from state to state, with some areas having more competitive rates due to local market conditions.

Insurance company and policy type 

Different insurance companies offer varying policy options and pricing structures. Shopping around and comparing quotes from multiple insurers can help you find the most cost-effective policy that suits your needs. You can get started by exploring your long-term care insurance options here.

The bottom line

Long-term care insurance can be a valuable component of your financial plan, helping you protect your assets and maintain your quality of life as you age. However, the cost of long-term care insurance can vary significantly based on various factors — with the most significant typically being your age at the time of enrollment. That's why it's essential to carefully evaluate your needs and compare quotes from different insurers to find the right policy that fits your budget and provides the coverage you require. While long-term care insurance premiums may seem like an additional expense, they can offer peace of mind and financial security in the face of uncertain future healthcare costs. Planning ahead today can lead to a more secure and worry-free tomorrow.