You Want to Protect Retirement Assets
Coverage can reduce the amount that may need to be withdrawn from investments or retirement income if extended care is needed.
Direct Answer
When Can Long Term Care Insurance Make Sense?
Long term care insurance can make sense when a future care bill would materially reduce the assets or income you want available for yourself, a spouse or heirs, and you would rather pay a known premium today to transfer part of that risk to an insurer.
It is not automatically a good purchase for everyone. The policy has to fit your cash flow, health, asset level, family situation and tolerance for self-funding risk.
Good Fit
Long Term Care Insurance May Be Worth Considering If
You Want a Dedicated Care Benefit
A policy can create a defined pool for home care, assisted living or nursing care according to the contract.
You Can Afford the Premium Long Term
The premium should fit the retirement plan without forcing you to cut essential spending or abandon other important goals.
You Are Still Insurable
Long term care coverage is medically underwritten. Applying before major health changes can preserve options that may disappear later.
When It May Not Fit
When Buying Long Term Care Insurance May Not Be Wise
The Premium Strains Your Budget
A policy should not create a new retirement cash flow problem while trying to solve a future care problem.
You Can Comfortably Self-Fund
Households with substantial liquid assets and income may choose to retain more of the risk instead of transferring it.
The Coverage Is Too Limited for the Price
Compare the benefit pool, inflation protection, elimination period, benefit trigger and claims method before judging the policy by premium alone.
Medicare is not the fallback for custodial care. Medicare does not cover long term custodial care simply because you need help with daily activities. See Medicare and Long Term Care, What Does Medicare Cover?
Common Questions
Frequently Asked Questions
Is long term care insurance a good investment?
It is better viewed as risk-transfer insurance than as an investment. The goal is to protect against a potentially large care expense, not to generate an investment return.
What if I never use the policy?
Traditional policies may pay no benefit if you never have a qualifying claim. Asset-based policies can include other policy value, but they have different costs and tradeoffs.
Should I insure every possible care expense?
Not necessarily. Some plans intentionally combine insurance with personal assets so the policy funds part of the expected care cost rather than all of it.
Related Long Term Care Topics
Keep Exploring
Want to Compare Long Term Care Options?
Compare the benefit structure, underwriting, elimination period, inflation protection and premium before deciding which type of long term care coverage fits your plan.
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Educational Disclaimer
This information is for general educational purposes and is not individualized insurance, legal, tax, investment or financial advice. Product features, underwriting, premiums, benefit triggers, riders and availability vary by insurer, state and individual circumstances. Review the actual policy before purchasing coverage.
