Buying Long-Term Care Insurance

There are various options for purchasing long-term care insurance, including from an insurance specialist, from your employer or through your participating association. Your age, assets and employment status will likely each play a significant role in determining the most suitable approach for obtaining your long-term care coverage.

Eric Estevez, Independent Licensed Life Insurance Agent
  • Written by
    Eric Estevez

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Edited By
    Savannah Pittle
    Savannah Pittle, senior financial editor for RetireGuide

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is a professional writer and content editor with over 16 years of professional experience across multiple industries. She has ghostwritten for entrepreneurs and industry leaders and been published in mediums such as The Huffington Post, Southern Living and Interior Appeal Magazine.

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  • Financially Reviewed By
    Daniel J. Adams, MBA, CFP®, CLU®
    Daniel J. Adams, MBA, CFP®, CLU®, Certified Financial Planner™ Professional and Independent Insurance Agent

    Daniel J. Adams, MBA, CFP®, CLU®

    Certified Financial Planner™ Professional and Independent Insurance Agent

    Daniel J. Adams, the founder of CEG Life Insurance Services, boasts extensive expertise in life and health insurance products. His role as a Certified Financial Planner™ professional and independent insurance agent allows him to aid clients in establishing a solid financial future. Moreover, he takes on the responsibility of training new agents and offering guidance to other financial professionals.

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  • Published: October 23, 2023
  • Updated: October 25, 2023
  • 7 min read time
  • This page features 3 Cited Research Articles
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APA Estevez, E. (2023, October 25). Buying Long-Term Care Insurance. RetireGuide.com. Retrieved May 19, 2024, from https://www.retireguide.com/long-term-care-insurance/buy/

MLA Estevez, Eric. "Buying Long-Term Care Insurance." RetireGuide.com, 25 Oct 2023, https://www.retireguide.com/long-term-care-insurance/buy/.

Chicago Estevez, Eric. "Buying Long-Term Care Insurance." RetireGuide.com. Last modified October 25, 2023. https://www.retireguide.com/long-term-care-insurance/buy/.

Key Takeaways
  • Long-term care insurance can be purchased through different methods like insurance specialists, employers and associations or programs.
  • No matter how you buy, be wary of pushy salespeople and find a professional you trust.
  • Long-term care insurance options have evolved positively over the last several years in terms of policy structure and riders.

Buying Through an Insurance Specialist

The process of buying long-term care insurance through an insurance specialist is quite simple. To start, call your local insurance agencies and choose a trusted advisor. Be cautious when selecting an agent to work with, as each agent may have different expertise. You don’t want to buy long-term care insurance from an agent who primarily sells home and auto insurance.

The agent will likely ask for your age, gender, tobacco use and about your health history before providing you with quotes. If you decide to proceed, you’ll fill out an application and submit it to the insurance carrier. Following that, the carrier may request that you complete an exam and may also ask to review your medical records. Upon receipt of all application requirements, they will determine your eligibility and the final cost of the plan. Once you’ve decided to purchase, the carrier will issue your policy.

This method may be best suited for someone with ample discretionary income since these plans are typically paid monthly or through various premium modes — a mode is industry lingo for the frequency of payment. For those who have available assets, a single premium option that allows you to purchase the entire policy with one premium payment may be best.

Pro Tip
Professionally speaking, using a broker can be advantageous in terms of achieving peace of mind. Unlike captive agents, brokers are not tied to one carrier. Be sure to ask these questions as you go through the process of choosing your specialist.

One advantage of working with an insurance specialist is the freedom to pick who you work with. If you purchase through employer or association affiliates, your choices may be more limited. However, buying through an insurance specialist may take more time because each application is individually considered before a policy is issued.

The most important preparation for purchasing a long-term care insurance policy is educating yourself on the available options. Make sure to ask lots of questions and gather as much information as you can to help you determine both who to work with and what policy is best for you.

Buying Through Your Employer

Many employers provide long-term care insurance options. While you might assume that these group insurance policies are more affordable than individual policies, that’s not always the case when it comes to long-term care insurance. Group policies may offer cost advantages for some types of insurance like group life or group health, but the dynamics can be different for long-term care coverage.

This is because long-term care providers have scaled back “true group” policies and are now offering “multi-life” packages. True group policies used to work like traditional group health insurance, bypassing underwriting requirements for employers with minimum participation criteria. Since that is not the case anymore, multi-life policies are now more relevant to discuss.

Multi-life policies are no different from individual policies, although the insurance carrier may offer a small discount, commonly in the neighborhood of 5%. It’s important to note that each applicant must pass underwriting standards and the employer must meet minimum participation requirements to qualify. Some employers may cover a portion of the costs of their employees’ long-term care policies, though this is not guaranteed.

The main negative to purchasing through an employer is the lack of flexibility. The carrier and policy will provide limited options to choose from.

Before investing in a long-term care insurance policy through your employer, it’s recommended to understand any constraints that may apply to the policy if you leave the company. Are you able to continue your policy on your own dime? Does the policy terminate after leaving your employer?

You want to fully understand the policy before committing to such a long-term product that you will likely use much later in life.

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Buying Through An Association or Program

Purchasing through an association is no different from buying through an employer. A broker or agent may be able to offer multi-life policies to an association’s members through several carriers.

This type of policy, though no different from an individual policy in terms of benefits, is best suited for someone whose association meets minimum participation requirements. Associations that commonly offer long-term care insurance include professional associations like medical or legal associations, alumni associations and membership-based organizations.

One advantage of going through an association is the possibility of a discount. However, be cautious about the strength and stability of the association. If the association is not well-established, it may not be around for a long time and the discounts may be at risk.

You may also be able to buy long-term care coverage through a program. For example, the Deficit Reduction Act (DRA) of 2006 authorized states to offer special Medicaid programs related to the purchase of qualified private long-term care insurance policies. These programs are also known as State Partnership policies or Medicaid Partnership policies.

To determine the availability and status of these programs in your state, consult a local expert or contact your state’s Department of Insurance.

Tips To Know Before You Buy

Before buying long-term care insurance, there are several things to consider.

First, evaluate your assets in relation to the coverage you’re seeking. You want to purchase the correct amount of coverage with enough benefits, not overbuy. Keep in mind that it is easier to decrease coverage over time than to increase it.

Always consider affordability’s relationship to aging. Take into account that your monthly income is most likely subject to change with age. Also note that coverage is generally less expensive when you’re younger, all other factors being equal.

Did You Know?
Long-term care insurance policies are popular among retirees or individuals nearing retirement, typically between the ages of 50 and 75, who have more than $50,000 to invest.

Always consult with one or more professionals before deciding on coverage, yet be wary of pushy salespeople. Being educated is most important for any investment. Remember, there is no blanket policy that makes sense for everyone. Each situation is different, and you’ll have to decide what’s best for you and your family.

It’s also worth considering that long-term care is available as a rider on permanent life insurance policies. This form of coverage may provide a lump sum or a percentage of the death benefit of a whole life insurance policy. Waiting periods may apply to this type of coverage.

Although budgetary constraints are often the first concern when choosing a policy, eligibility can also be a significant issue. Significant ailments or preexisting conditions may cause a denial of your application. History of cancer, stroke or the need for current help with activities of daily living all should be cause for concern when thinking about your eligibility.

When selecting a carrier, it’s important to vet your options and ensure the company’s reputation. You can check their AM Best rating, which indicates the financial strength of the company and the likelihood of them fulfilling the contract and paying the benefits covered by your premiums. Educating yourself before engaging with advisors can help you make the right choice. Familiarize yourself with terms such as benefit periods, elimination periods, inflation protection and optional riders.

With so much information available to you, it can be difficult to understand the best option for you and your loved ones. Your needs will determine the process of buying a policy that works best for you.

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Last Modified: October 25, 2023

3 Cited Research Articles

  1. American Association for Long-Term Care Insurance. (2023). Group vs. Individual Long Term Care Insurance. Retrieved from https://www.aaltci.org/long-term-care-insurance/learning-center/group-long-term-care-insurance.php
  2. Administration for Community Living. (2020). ‌Buying Long-term Care Insurance. Retrieved from https://acl.gov/ltc/costs-and-who-pays/who-pays-long-term-care/buying-long-term-care-insurance
  3. ‌American Association for Long-Term Care Insurance. (n.d). State Long-Term Care Partnership Plans. Retrieved from https://www.aaltci.org/long-term-care-insurance/learning-center/long-term-care-insurance-partnership-plans.php