Long Term Care Insurance Quotes: How Much Do You Need?

Most people won’t object to paying for most types of insurance: homeowners, health, life, auto, etc. While most people see a need for long term care insurance, once they receive a quote and see how much it actually costs, they are immediately turned off.  But should the rate of long term care insurance be such a deterrent? The scary reality is that there is an overwhelming likelihood that you and I will both need some sort of long term care in our lifetime.  How much of a chance?   According to the U.S. Administration of Aging, over a 70% chance.  That means you have a greater chance of needing long term care than Shaquille O’neal has of making a free throw.  How scary is that?

Long Term Insurance Quotes: How Much Do You Need?
Creative Commons License photo credit: simaje

The purpose of this post is two-fold. First, to give you a sense of how much long term care may cost in the future. Secondly, to give some real life long term insurance quotes to help illustrate how much it may cost you.

How Much is Long Term Care?


That’s the million dollar question.  MetLife did a survey in 2009 of estimated long term care costs.  Based on their findings the average annual cost of nursing home care is now $79,935 or $219 per day. That’s up 3.3% from 2008. The average nursing home stay is about 2.5 years, which means you would need roughly $200,000 to pay those bills.  That’s a little more than your DirecTV bill, huh?

What if you had to pay the entire long term care cost of pocket?  Would your retirement nest egg withstand such a huge blow?  Medicaid may help, but that’s only when everything is depleted.  The clear solution is long term care insurance.

How expensive is Long Term Care Coverage?

Annually, it typically costs about as much as a cheap used car. According to the  MetLife survey: in 2009, a 52-year-old federal employee could pay $1,524 annually for an LTC policy with a $200-per-day benefit for three years and a maximum lifetime benefit of about $200,000.

Does $1,500 or $1,800 or $2,100 annually (just to throw out a few numbers) sound expensive? These premiums are certainly inexpensive compared to the staggering bills you may face if the need for LTC enters your life. Yes, there is a chance that you may never need LTC coverage. However, with advances in medicine and healthcare, we may live much longer than we anticipate before we leave this world. If you’ve ever had an experience where a loved one needed long term care then the cost is not an issue.  A client of mine shared his story where long term care insurance saved his family from financial and emotional heartache.

Elder Law Attorney’s View

Suggesting how much long term care insurance one might need is tough because there are a lot of factors at work here.   Much depends on the state you reside.  Other factors include you current health, family medical history, and how much in investable assets you have.  In addition to that, there are other variables to consider. The are four primary variables that must be considered when building an Long Term Care Insurance policy:

  • daily benefit amount
  • benefit period
  • elimination period
  • inflation protection

I decided to the seek the counsel of Tiffanny Sievers of S.I. Elder Law who advises her clients on elder issues. Here’s what Tiffanny had to say:

I typically suggest people get at least a 5 year pay out because the look back period for transfers is moving to 5 years. Although right now it is 3 years, it is going to be moving to 5 years, very soon in Illinois.

How Much of a Daily Benefit Do You Recommend For a Long Term Care Insurance Policy?

In Southern Illinois Nursing Home expenses range from $90 a day to $180 a day.  Therefore I would say that the daily benefit should be no less than $100 a day and probably better somewhere around $120 a day.

How Long of an Elimination Period?

I would say 90-100 day elimination period.  The reason for this is because Medicare will usually pay for the first 100 days and you want to your long term care insurance to kick in right after Medicare runs out.

How Much of a Total Payout Should One Consider When Purchasing Long Term Care Insurance?

Of course, the best plan would have no limits but something reasonable would be $200,000-$250,000 maximum payout.  Like a term certain annuity, a good idea might be to make sure that your plan will pay the maximium daily benefit for 5 years.

For the most part, if you have a decent long term care insurance policy, you will not have to worry about loosing all of your assets to assisted living and or the nursing home.  I recomend to all of my clients that are under age 70 that they at least try to get some coverage.  You have a greater chance of becoming disabled than actually dying.

As you can see, there are many considerations that go into purchasing a long term care insurance policy.  Thanks to Tiffanny for sharing her expertise!

Long Term Insurance Quotes

While the MetLife survey provided some good general info on the actual cost of Long Term Care Insurance, I decided to contact one of the leading providers and request an actual quote on a long term care insurance policy.   The Long Term Insurance quotes I requested were for a 50, 55, and 60 year old, respectively- all assuming to be in excellent health with no benefit for a spouse.  As the below chart indicates the three constants were daily benefit amount, benefit period, elimination period, and policy limit.  Let’s see what the results show:

Age50 Year Old55 Year Old60 Year Old
Risk ClassSelectSelectSelect
LTC Benefit Amount$100 Daily$100 Daily$100 Daily
Benefit Period3 Years3 Years3 Years
Policy Limit$109,500$109,500$109,500
Elimination Period90 Days90 Days90 Days
Inflation Option5% Compound5% Compound5% Compound
Stay At Home Benefit$3,000$3,000$3,000
Total Annual Premium$1,078.65$1,198.50$1,462.17
Sample of Long Term Insurance Quotes for 50 year olds on up to 60 year olds.

Long Term Insurance Quote Findings

Based on the findings we can derive some interesting information.   First, that the total price on the annual premium increases by 11% by waiting to age 55 instead of 50.   Second, the percentage increase from 55 to 60 is 22%.   Thirdly, by postponing from age 50 to 60, there is a 35.6% in premium.  Many baby boomers always wonder what the potential increase in premium might be by waiting, this should give some insight.

Disclaimer: You should not base these numbers as a true representation of long term care insurance premiums.  This is just to be used as an example and you should consult a qualified licensed professional to give you an accurate quote based on your situation.

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