How to make long-term care insurance more affordable
As you age, there's a high likelihood that you'll have increasing medical needs. That's why insurance costs tend to rise with age. And, that's also why it's important to plan for increasing healthcare costs as you prepare for retirement.
Nearly 70% of people ages 65 and older will need some form of long-term care service at some point in their lives, and that care can be costly. According to the Genworth Cost of Care survey, the average annual cost of long-term care ranges from $22,161 to $118,457 in 2024, depending on the type of care you need. Those costs are also expected to increase in the years ahead.
One way to plan for them is with a long-term care insurance policy but that type of coverage also comes at an additional cost. So is there any way to make long-term care insurance more affordable?
Find out how affordable long-term care insurance can be today.
How to make long-term care insurance more affordable
Depending on your age and overall health, long-term care insurance can cost anywhere from several hundred to a few thousand dollars per year. So can you cut that cost?
"There are several ways to reduce the costs for consumers looking for long-term coverage," says Larry Nisenson, chief growth officer at Assured Allies, a firm focused on helping consumers age successfully.
Here are a few options to make this type of coverage more affordable:
Don't purchase too much coverage
One of the biggest factors to play a role in your long-term care insurance premiums is the amount of coverage you purchase. That's why, if your goal is to make long-term care insurance more affordable, "the first step is to determine how much coverage is needed based on geography, financial means and level of family support," Nisenson says.
Here are a few factors that can play a role in your coverage needs:
- Geography: Long-term care support and services may be more or less expensive depending on where you live. For example, services in New York City are likely to be more expensive than services in certain areas of Florida. As you determine your coverage needs, consider the average cost of care in the area where you plan on spending your retirement.
- Your financial means: You may not need long-term care insurance to cover the full cost of your long-term care. After all, there's a high likelihood that you have Social Security income and retirement savings at your disposal. In certain situations, it makes sense to consider long-term care insurance as a supplement to your retirement income rather than your sole source of payment for your care.
- Family support: Your family may be willing to provide some of the support you need. Though, even if your family provides most of your support, you may need to cover the cost of other services from time to time. Still, familial support can greatly reduce your need for formal care providers, reducing your coverage needs and the cost of your premiums in the process.
Compare your long-term care insurance coverage options now.
Consider coverage and elimination periods
"Opting for a shorter coverage period or increasing the elimination period, which is the amount of time the policyholder pays out of pocket before the policy benefits kick in, would reduce cost," says Nisenson.
Here's what you should consider:
- Coverage period: Your coverage period is the minimum amount of time your insurance will provide coverage. "The average long-term care event is 2.7 years long. As a result, the normal long-term care policy offers three years of coverage," Lamar Brabham, CEO and founder of Noel Taylor Agency, a financial planning firm, recently told CBS News. If the policy you're interested in comes with more than three years of coverage, it can make sense to consider reducing your coverage period to cut the cost of your premiums.
- Elimination period: After a coverage trigger, this is the time period that must pass before your insurance provider will start paying for your care. For example, if you have a 6-month elimination period, you'll have to cover your own cost of care for the first six months. Consider how much of your care you can afford to cover when you choose this period. After all, the longer the elimination period is, the lower your premiums will likely be.
Get professional assistance
"A licensed agent can help a consumer look at the various types of long-term care products in the market and recommend one that best fits their needs," says Nisenson. "Products available today provide great flexibility and allow policyholders to customize their coverage."
Find out more about your long-term care insurance options now.
The bottom line
Long-term care insurance is a valuable retirement planning tool. On the other hand, it is an additional cost to consider. But the good news is that there are multiple ways to make long-term care insurance more affordable.
