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
    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • 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 24, 2023
  • Updated: October 25, 2023
  • 7 min read time
  • This page features 5 Cited Research Articles
Fact Checked
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A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

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How to Cite RetireGuide.com's Article

APA Estevez, E. (2023, October 25). How Much Does Long-Term Care Insurance Cost? RetireGuide.com. Retrieved July 15, 2024, from https://www.retireguide.com/long-term-care-insurance/costs/

MLA Estevez, Eric. "How Much Does Long-Term Care Insurance Cost?" RetireGuide.com, 25 Oct 2023, https://www.retireguide.com/long-term-care-insurance/costs/.

Chicago Estevez, Eric. "How Much Does Long-Term Care Insurance Cost?" RetireGuide.com. Last modified October 25, 2023. https://www.retireguide.com/long-term-care-insurance/costs/.

Key Takeaways
  • Understanding the average costs of long-term care insurance is crucial for retirement planning, considering that health expenses are the primary financial concern for retirees.
  • Long-term care insurance costs are influenced by factors such as age, gender, health history, policy options and the risk management strategies of insurance carriers.
  • When budgeting for long-term care insurance, you should assess your discretionary income, consider policy features and tradeoffs, and seek guidance from specialized advisors to make informed decisions.

Average Long-Term Care Insurance Costs

Oftentimes, retirement means living on a fixed income. Unfortunately, this typically comes at a time where health costs are rising. That’s why it is important to understand the average costs associated with long-term care insurance when planning for retirement.

Average Costs of Long-Term Care Insurance in 2023
Single Policyholders
Given level benefits of $165,000, annual premium for a single male or female at age 55 are $900 and $1,500 respectively.
Married Policyholders
Given level benefits of $165,000, annual premium for a married couple at age 55 is $2,080 combined.

The largest expense for a retiree in America is health care cost. The earlier you plan for this, the better your quality of life will be in your golden years. Understanding general cost can help you when comparing any quotes you may receive from agents and brokers, though exact premiums can vary based on individual factors. Therefore, any average cost figures you see while gathering information should be taken with a grain of salt.

Gender & Status Age Level Benefit Annual Premium
Single Male 55 165,000 $900
Single Female 55 165,000 $1,500
Married Couple 55 165,000 $2,080 combined
Single Male 60 165,000 $1,200
Single Female 60 165,000 $1,960
Married Couple 60 165,000 $2,550 combined
Single Male 65 165,000 $1,700
Single Female 65 165,000 $2,700
Married Couple 65 165,000 $3,750 combined
Source: American Association for Long-Term Care Insurance
“When shopping for long-term care insurance, make sure you talk to an experienced advisor who can not only explain the benefits and features of a policy, but can also show you a cost-comparison of different policies available to you.”

Factors That Impact Cost

Long-term care insurance costs are determined by the consideration of age, insurance carrier, family health history, gender, general health and policy options chosen. Insurance companies employ actuaries whose main job is to assess the risk of a given population.

The insurance carriers will look at your determining factors. Then, the actuarial work, as well as other critical departments will determine the final premiums to be quoted to an applicant. If a proposed insured is riskier than average, then the premiums will also be higher than average.

Riskier applications include higher age and poor health history. Other factors that increase costs are shorter elimination periods, longer coverage length, and optional riders, such as inflation protection. An elimination period is the amount of time that must pass before benefits are eligible to begin. The typical cost structure of such policies come in several forms, most commonly being monthly, quarterly or annual payment options.

Cost Factors
Age
The older an applicant is, the riskier they will be in the eyes of an insurance carrier because they will be more likely to use the benefits quicker than a younger policyholder. The quicker a policyholder uses the benefits, the less money the insurance company will be making.
Gender
Women tend to live longer than men, which means they will be more likely to use long-term care benefits before death and for a longer period of time, according to the New York Times. This increases the premiums for women.
Health
A poor health history and the severity of the applicant’s conditions will be highly considered throughout the underwriting process. The insurance carriers have the right to either increase premiums or deny the application altogether.
Insurance Carrier Policies
Each company will vary in their risk management strategy. Some carriers will be more willing to accept certain conditions than their competitors.
Marital Status
Married individuals pay less in premiums than the single demographic.

Sample Premiums and Cost Examples

According to Forbes, a long-term care insurance policy for an average 62 year old costs approximately $300 per month. For comparative purposes, Consumer Affairs states that an average 55-year-old man would pay about $142 per month. This cost comparison reiterates how important it is to secure long-term care insurance early.

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How To Pay for Long-Term Care Insurance

Long-term care insurance should be considered based on the amount of discretionary income of the individual or household. Of course, the earlier the better, being that premiums will be cheaper the younger you are. But long-term care should be looked into at least by the age of 50. An ideal candidate would be someone between 50 to 70 years old with at least $50,000 to invest.

Premium Payment Options

Premium payment options available for long-term care insurance policies are generally monthly, quarterly, semi-annually or annually. Some carriers also offer some variation of a quicker payoff, including 5-pay — which allows the policyholder to fully pay off the policy in 5 equal annual payments — or single-pay — a one-time payment.

Policy Features and Cost Trade-Offs

While obtaining the correct coverage is an important consideration in determining which policy you ultimately buy, budgetary concerns do come into play. Each policy should be customized to your values, needs, priorities and budget. But this will likely come with a trade-off.

Your advisor should explain to you that a high benefit amount will add to your premium, while a shorter duration of coverage will decrease premium.

Adding features, such as inflation protection, will increase your premium, while a longer elimination period will decrease your premium. Current economic issues will come into play, as well. Inflation, for example, is a hot button issue in the news, which is driving incorporating the inflation protection rider into many newly issued long-term care insurance policies.

Budgeting for Long-Term Care Insurance in Retirement

Retirement plans should be designed and reviewed holistically. Long-term care should play a part as health care is such a pressing issue for retirees, especially being that most are living on a fixed income.

You should understand how your income will be funded, whether that be by Social Security, your retirement nest egg or other sources. Next, you should identify fixed and variable expenses. Insurance policies would fall into fixed expenses as the cost often do not change.

You can also consider bypassing budgeting for the cost if you have the assets to pay a single premium for the policy. You should discuss with your advisor whether that will affect your monthly income in any significant way, as your assets will most likely be a large part of your income.

Tax Considerations

According to the American Association for Long-Term Care Insurance, traditional and tax qualified long-term care policies can be beneficial from that perspective. Talk to a trusted tax professional for advice on the qualification for a medical expense deduction.

Your qualification will depend on your age and plan’s tax-qualified status. Your long-term care insurance premium may be able to help you attain this on your tax return, further lowering your tax liability.

Remember, not all policies will qualify for this benefit, which is why having a trusted advisor can be beneficial.

Shopping for Long-Term Care Insurance

Your first step in shopping for long-term care insurance would be to contact a trusted advisor. Typically, this would come in the form of an agent, broker or financial advisor. Agents are normally associated with one company. Brokers shop multiple carriers, which is important for price and feature comparison. It will also save you time from contacting different agents/companies directly.

Financial advisors can be associated with one or multiple companies. That should be identified before working with them.  Whichever professional you choose should be well versed enough in the industry to deeply explain policy details and benefits.

They should have a working knowledge of the financial strength and reputation of the long term care insurance companies they represent. This knowledge is obtained from past client situations, which they would have if they are experienced.

Be sure they specialize in long-term care insurance. It would be unfavorable for you to purchase a long-term care policy from someone whose business is concentrated in something else, like home and auto insurance.

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Frequently Asked Questions About Long-Term Care Insurance Costs

When should you buy long-term care insurance?
You should highly consider long-term care insurance in the age range of 50 to 70 years old.
Are long-term care insurance premiums tax-deductible?
Only tax-qualified plans can potentially produce a tax deduction.
Do costs vary across types of long-term care insurance?
Aside from personal attributes, cost will vary depending on the policy features, carrier and benefits selected.
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Last Modified: October 25, 2023

5 Cited Research Articles

  1. American Association for Long-Term Care Insurance. (2023, March 6). 2023 Long-Term Care Insurance Price Index Released. Retrieved from https://www.aaltci.org/news/long-term-care-insurance-association-news/2023-long-term-care-insurance-price-index-released
  2. Forbes. (2023, February 20). What Is Long-Term Care Insurance? Retrieved from https://www.forbes.com/health/senior-living/long-term-care-insurance/
  3. Consumer Affairs. (2022, March 3). Average Cost of Long-Term Care Insurance. Retrieved from https://www.consumeraffairs.com/insurance/cost-of-long-term-care-insurance.html
  4. The New York Times. (2023). Long-Term Care Insurance Priced by Gender. Retrieved from https://www.nytimes.com/2014/02/12/your-money/long-term-care-insurance-priced-by-gender.html
  5. American Association for Long-Term Care Insurance. (2023). Long-Term Care Insurance Tax-Deductibility Rules - LTC Tax Rules. Retrieved from https://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php