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Ways to cut the costs of long-term-care insurance

How to shop for long-term-care insurance, and what to know about hybrid and 10-pay policies

A person turning 65 has nearly a 70% chance of needing long-term care one day, the government says.

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Two things can be very expensive when it comes to long-term care: the cost of the care and the cost of a long-term-care insurance policy.

There’s not much you can do about the cost of long-term care itself — from about $5,100 a month for a home health aide to roughly $8,000 a month, on average, for a semiprivate room in a nursing home, according to the Genworth Cost of Care Survey. That can mean an annual cost of up to almost $100,000.

But there are ways to save on buying a long-term-care insurance policy or reducing the annual premiums for a policy you already own.

What long-term-care insurance pays for

A long-term-care insurance policy can come in handy in the future should you wind up needing assistance with daily living activities like bathing, feeding, dressing or toileting. It won’t pay for things like trips to the doctor or grocery store, though.

A person turning 65 has nearly a 70% chance of needing long-term care one day, based on a U.S. Department of Health and Human Services estimate. One in five people requiring long-term care will have that assistance for more than five years, the government says.

Medicare generally doesn’t cover long-term care. Medicaid does, but only for the poorest Americans. So, unless you’ll qualify for Medicaid or have enough in savings to self-insure, a long-term-care policy could be worth considering.

“Long-term-care insurance is not for everybody, but long-term-care planning is for everybody,” Brian Gordon, president of Gordon Associates Long Term Care Planning in Bannockburn, Illinois, said on the new Friends Talk Money podcast episode about long-term care policies. (Full disclosure: I co-host that podcast with personal finance writer Terry Savage and Pam Krueger, CEO of the financial adviser vetting firm

What long-term-care insurance costs

A standard long-term-care policy with inflation protection often runs between $2,000 and $3,600 a year for $165,000 in benefits if you purchase one in your mid-50s (the typical age of a buyer). Premiums for women can be substantially more than for men since women live longer, in general.

The price of a long-term-care insurance policy can be considerably higher if you buy it in your 60s or 70s than in your 50s.

“I usually tell people a policy will cost anywhere from about 4% to 6% a year more if you wait to buy it,” said Gordon.

But your application may get rejected due to your health if you try to buy a long-term-care insurance policy in your 60s or 70s. “Not everybody is going to be a candidate to buy long-term care,” Gordon noted.

Potential reasons for declined applications: obesity, hypertension, cancer, dementia and joint problems.

Related: Assisted living would cost $100,000 a year where we live. We’re almost in our 60s, should we get long-term-care insurance? 

How to cut long-term care policy cost

One way to reduce the cost of a long-term-care insurance policy is buying one that will only pay benefits for two to five years or so, rather than lifetime benefits.

You might also avoid owing long-term-care insurance premiums year after year by purchasing what’s called a “10-pay” policy.

This means you’ll pay the premiums over 10 years but then never again. But annual premiums for 10-pay policies can run 2½ times the initial premium for similar traditional policies.

A 10-pay policy may also help avoid the substantial premium increases policyholders often face, though. Some 10-pay policies lock in the cost of your premiums, so they won’t rise during the 10-year period.

Plus: 4 ways to pay for long-term care

Policy-shopping advice

When shopping for a long-term care policy, be sure to find an insurer with strong financial health, since its benefits likely won’t be paid out for years. You or your agent can review insurers’ financial strength by looking at their ratings from companies like A.M. Best, Moody’s and Standard & Poor’s.

Married couples who can’t afford the cost of buying a long-term-care insurance policy for each of them should look at each partner’s financial assets, Gordon advised. They might then choose to buy a policy just for the person with fewer financial assets.

If you’re peeved at the possibility of paying for a long-term-care policy and not getting many, or any, benefits paid out, a hybrid version could be an option.

Pros and cons of hybrid policies

This type of policy combines long-term-care insurance with universal life or whole life insurance, so your loved one will be guaranteed a death benefit in exchange for the premiums you pay.

It costs two to four times more than a standard long-term care policy, however, according to the American Association for Long-Term Care Insurance.

A hybrid policy also requires a substantial upfront lump sum, which might be $125,000.

“We always design them [for customers] where we have a very minimal death benefit, because usually people in their mid-50s or 60s really don’t need life insurance anymore,” said Gordon. “I have one that I’m doing right now for a woman in her 50s where it ends up being about a $145,000 death benefit.”

See: Families drain their savings: The need for long-term care coverage is becoming a big-time problem

Get the most bang for your buck

If that woman used $100,000 of long-term care benefits and then died, $45,000 would get passed down to her heirs.

Gordon often recommends hybrid policies with roughly six years of long-term care benefits. “Usually, when we get clients a six-year benefit period, they get the most bang for their buck,” he said.

Richard Eisenberg is the former senior web editor of the Money & Security and Work & Purpose channels of Next Avenue and former managing editor for the site. He is the author of “How to Avoid a Mid-Life Financial Crisis” and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS Moneywatch. 

This article is reprinted by permission from, ©2023 Twin Cities Public Television, Inc. All rights reserved.

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