I'm in My 50s. Do I Need Long-Term Care Insurance?

Long-term care insurance is designed to prevent the financial strain that comes with unexpected nursing home stays and other types of long-term care you might need later in life. With nursing home stays exceeding six-figure sums in many cases, this can be valuable protection for retirees.

While you’re unlikely to need long-term care anytime soon if you’re a healthy 50-something who hasn’t retired yet, you can certainly purchase a long-term care policy if you choose to do so. In this article, we’ll discuss the basics of how long-term care insurance works, why you might want to consider it as part of your retirement planning, and why it could be a smart idea to buy it while you’re still relatively young.

What is long-term care insurance?

In a nutshell, long-term care insurance, or LTC insurance, is designed to protect you financially in the event that you require extended care. It is a completely different concept than life insurance or health insurance. Depending on the circumstances, LTC insurance can pay for the cost of nursing home stays, assisted living facilities, or in-home caregivers, just to name some of the most common.

Long-term care insurance policies differ significantly from one another, but the general idea is:

  • LTC insurance kicks in after some required waiting period, such as 90 days.
  • Most policies have a maximum per-day benefit.
  • Most LTC policies provide coverage for one to five years of qualifying long-term care services, although there are policies that cover even longer potential stays.

Do you need it?

It’s easy to see why long-term care insurance could be desirable. For the most part, nursing home stays and other long-term care expenses aren’t covered by Medicare. And about 50% of people over the age of 65 will require long-term care at some point in their lives.

The average cost of a private room in a nursing home is more than $100,000 per year. It can be significantly higher in some of the more expensive areas of the United States.

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The bottom line is that long-term care insurance ensures that the retirement and savings account balances you’ve worked so hard to build won’t be consumed by unexpected costs like these.

Why would you buy LTC insurance in your 50s?

To be sure, you are most likely to need long-term care services later in life. So, it might seem wasteful to spend money on an LTC policy when you’re still in your 50s, especially if you’re rather healthy.

However, one extremely important concept to know is the sooner you buy LTC insurance, the lower the premiums will be.

Consider this example. As of 2022, the average annual cost of a LTC insurance policy for a 55-year-old man with $165,000 in level benefits was $950, and for a 55-year-old woman, the average premium was $1,500. (Note: The difference is mainly due to the fact that women tend to live longer than men, and therefore have a higher likelihood of needing long-term care at some point.)

The cost of waiting for 10 more years to purchase a policy would result in premiums that are 50% higher, on average. Waiting 20 more years (until you’re 75) would increase the cost of LTC insurance by a staggering 188%.

The bottom line on buying LTC insurance

Of course, there are other factors that determine LTC insurance premiums. Your current health status, desired coverage amount, and where you live are a few examples. Keep in mind when choosing your coverage amount that it doesn’t necessarily need to cover the entire cost of long-term care — it just needs to bridge the gap between what your Social Security and other reliable retirement income will pay and the anticipated cost of long-term care.

However, the age at which you purchase the policy can make a massive difference, and in many cases, can be the difference between an affordable LTC premium and coverage being impractical to buy.

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