Extensive long-term care needs may soon be a fact of life for many seniors who are nearing retirement or may already be a fact of life for those with disabilities, but not everyone knows how to plan for the cost of that care. According to the National Association of Insurance Commissioners, 70% of those who reach age 65 are projected to need at least one form of long-term care at some point. The type of care can vary in form, with nursing home stays, adult daycare, respite care, and assistance from home health aids all being common types of long-term care. With such a high percentage of seniors and those with disabilities likely to need care, long-term care insurance can be an important financial protection to consider.
Long-term care (LTC) insurance often provides two to six years of coverage through cash payments or reimbursements, and it can cover a wide range of long-term care needs. However, in recent years, shopping for this insurance has become harder. Premiums have risen and numerous companies have stopped offering LTC insurance altogether. About 80 companies dropped out of the LTC insurance market in the early 2000s as a response to rising healthcare costs in the United States. With fewer options to choose from, today’s younger seniors and disabled face some difficult decisions when trying to plan for potential future care costs.
While simply trying to self-fund your long-term care might sound like the simplest option, the reality is that LTC insurance is still a better choice for many. The right policy can amplify your funds and protect against healthcare inflation. In 2020, the average annual US cost of nursing home care in a private room was $105,850, and that number is only set to rise in the next few decades. That’s why it’s so important to consider all of your options, including long-term care insurance.
We created this guide to help you better understand your options for long-term care insurance. Below you can learn about prominent insurance companies offering long-term care policies that can offset increasingly high care costs. You’ll also find information to help you understand the basic terminology of the industry and the do’s and don’t of choosing a policy.
The first thing to know about long-term care insurance is that it comes in two forms: traditional and hybrid. A traditional policy centers on covering long-term care costs, so if you never need long-term care, you lose all potential benefits of having paid those premiums. Hybrid policies, on the other hand, are a combination of life insurance and long-term care insurance. If you do not use any long-term care benefits, your beneficiaries will get a death benefit when you are gone. If you do use the LTC benefits, then the death benefit will be depleted or paid out at a much lower amount, sometimes between 5%-20% of its original face value.
One of the most important differences between the two policy types is that hybrid policies almost always have “level” or “fixed” premiums, but traditional policies have premiums that may rise over time. Traditional policies sometimes have lower premiums to start with, but they can be unpredictable.
It’s also important to note that most hybrid policies pay out benefits during the first two years of LTC needs using an “acceleration” of the death benefit (may be called the ADBR). In the remaining years of the benefit period, they will pay you for LTC needs using the long-term care benefit rider (LTCBR) portion of the policy. You’re likely to see this terminology when shopping.
Key LTC Insurance Terms To Understand:
Company
Policy Types
Number of Policies
Offered
Reimbursement or
Indemnity?
Issue Ages
AM Best Financial
Rating
Northwestern Mutual
Lincoln Financial
30-80, varies by policy
Nationwide
Brighthouse Financial
New York Life
Traditional and Hybrid
35-75, varies by policy
Mutual of Omaha
Traditional and Hybrid
Both, varies by policy
Pacific Life
Both, varies by policy
MassMutual
Best Couple’s Discount
Founded in 1857, Northwestern Mutual is based in Milwaukee and has been a major player in finance and insurance for many years. This company is well-known for its life insurance products, annuities, disability insurance, and of course, long-term-care insurance. It is one of the few remaining brands that still sells traditional policies. Thanks to significant growth in 2020, this company now has the largest revenue of companies based in Wisconsin. Northwestern Mutual now ranks in 90th place among Fortune 500 companies.
Of all the companies we reviewed, we found that Northwestern Mutual had the best discounts for couples, with discounts rates as high as 30% off in some cases. This A++ rated company’s discounts help make its respected but somewhat costly policies more affordable for those in marriages or other long-term relationships.
Policy Types
Indemnity or Reimbursement?
Number of Policies Offered
Issue Ages
A.M. Best Company Rating
Northwestern Mutual’s Long-Term Care Insurance Policy Features
Northwestern Mutual only offers one long-term care policy, a traditional option called QuietCare. This plan offers a wide range of customization for total policy value, benefit period, elimination period, and maximum monthly benefits. Since it’s a reimbursement style policy, you can only receive the maximum monthly amount if you have receipts to match that amount, and you will need to submit quite a bit of paperwork each month.
You can also further modify your policy with riders, such as inflation protection or the Automatic Additional Purchase Benefit (which allows you to buy additional coverage in the future without additional underwriting), a survivorship benefit, a paid-up nonforfeiture benefit, and more. Rider availability can be impacted by state, age, and other factors. Keep in mind that riders can dramatically increase premiums, and should only be selected if absolutely essential.
Plan
QuietCare
Type
Maximum Lifetime Benefit
Benefit Amount
Benefit Period
Elimination Period
6 or 12 weeks in all states, additional options of 25 or 52 weeks in some states
Eligibility
Between ages 18-79, subject to underwriting
Lincoln Financial, a subsidiary of Lincoln National Corporation, was founded in 1905 and named in honor of President Abraham Lincoln. Currently headquartered in Radnor, PA, Lincoln Financial ranks 172nd on the Fortune 500 list and has an A+ financial stability rating from AM Best. It is a popular choice for a variety of life insurance policies as well as for its annuities.
Lincoln Financial’s hybrid LTC insurance policies are notable for their unusually high maximum issue ages. It can be difficult to qualify for an LTC policy once you’re well into retirement, and most companies will not approve these policies past the age of 70 or 75. However, Lincoln Financial has the ability to issue some policies up to age 80, provided that the applicant is in good health and meets other underwriting expectations.
Policy Types
Number of Policies Offered
Indemnity or Reimbursement?
Issue Ages
30-80, varies by policy
A.M. Best Company Rating
Lincoln Financial Long-Term Care Insurance Policy Features
Lincoln Financial only offers hybrid long-term care policies, and its mainstay policy is MoneyGuard III, which is a Universal Life policy. In 2021, it added the MoneyGuard Market Advantage, an indexed universal life policy, to its catalog, a policy that has asset growth potential tied to the stock market. However, growth is not guaranteed and it may also include higher fees.
Both of the policies are available in a wide range of benefit amounts, and both can be designed as a single premium payment policy or as a policy that you will pay premiums for over time. You can opt to include a variety of riders in either policy, including:
Plan
MoneyGuard Advantage
Moneyguard III
Type
Maximum Lifetime Benefit
Benefit Amount
Benefit Period
Elimination Period
Eligibility
Ages 30-70 with streamlined underwriting
Ages 40-80 with streamlined underwriting
NOTE: The information in this table may not fully apply in California and New York State.
Best Cash Benefits
Based in Columbus, Ohio, Nationwide provides insurance for automobiles, life, homes, farms, pets, and much more. In 2020, it paid $16.9 billion to its customers in claims and benefits. This company ranks 76th on the Fortune 100 list for revenue, and it also was rated number 91 out of 100 Fortune Best Companies to Work For. Since 1925, this company has been renowned for its quality and stability, and it is currently rated A+ by A.M. Best.
Nationwide’s CareMatters II policy is known as one of the best hybrid indemnity policies currently available. As a policy that pays cash benefits for long-term care needs, it allows seniors to choose how to best use their money without worrying too much about monthly paperwork. Its generous terms and flexible design make it a truly competitive option.
Policy Types
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
A.M. Best Company Rating
NOTE: The information in this table may not fully apply in California and New York State, where only an older version of Nationwide’s LTC insurance is available.
Nationwide Long-Term Care Insurance Policy Features
Nationwide has long offered a long-term care insurance option called CareMatters but has more recently created CareMatters II. This newer plan offers a wide range of benefits beyond that of its predecessor, although it is not available in California or New York State. CareMatters II is an indemnity plan that offers cash payments with few spending restrictions. This differs from the original plan which uses a reimbursement model, requiring monthly paperwork and offering less for long-term care needs.
CareMatters II is a hybrid policy with consistent premiums and payment of at least 20% as a death benefit, even if all LTC benefits are used. Numerous customization options are available, including a single, monthly, or annual payment option for five or 10 years or up to a specific age. Inflation protection riders and benefit periods between two or seven years also make this plan very customizable.
Plan
CareMatters II
Type
Maximum Lifetime Benefit
Benefit Amount
Benefit Period
Elimination Period
Eligibility
Ages 30-70, subject to underwriting
Highest Maximum Benefit for an Indemnity Policy
Brighthouse Financial is a relative newcomer in the life insurance and annuity market, but it’s quickly become a competitive option. Founded in Charlotte, North Carolina, this company began selling its policies in 2017. Brighthouse Financial ranks at 353 on the Fortune 500 list, reflecting a smaller market share than many of its competitors that we have covered. Its A rating from the A.M. Best indicates that, while it does not have quite the history of its competitors, it is still considered to be in good financial standing.
While it has never offered traditional LTC policies, BrightHouse Financial’s hybrid SmartCare option offers one of the highest benefit indemnity policies available. Its maximum benefit can be set at up to 1 million dollars, providing great coverage options for LTC as well as a significant death benefit should the LTC coverage not be used.
Policy Types
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
A.M. Best Company Rating
Brighthouse Financial Long-Term Care Insurance Policy Features
Brighthouse Financial offers one LTC policy, SmartCare, which offers cash payments with a death benefit of up to 1 million dollars. Customers can opt for universal life or indexed universal life. Inflation protection riders of 5% are available for SmartCare, as well. You can pay for this policy through a single premium or you can pay over a time period ranging from two to five years.
SmartCare includes multiple phases of coverage, which it calls the Long-Term Care Accelerated Death Benefit Rider (LTC ADBR) and the Extension of Benefits Rider (EOBR). The LTC ADBR lasts for two years and will provide coverage by reducing the death benefit by up to 95%. The EOBR will then add either two or four additional years of LTC payments, depending on which option you select. Together, the LTC ADBR and the EOBR equal your benefit period. With this policy, using long-term care coverage will mean that your beneficiaries will receive very little death benefit when you are gone.
Plan
SmartCare
Type
Maximum Lifetime Benefit
Monthly or Daily Benefit Limit
Benefit Period
Elimination Period
Eligibility
Ages 40-75, with simplified underwriting
*Higher amounts may be offered to certain age and health classes but will require more stringent underwriting.
Most Experienced Company
New York Life stands out as the company with the longest history in insurance among those that we have reviewed. Founded in 1845, this insurer consistently rates it as financially stable and profitable. It is currently rated an A++ (the highest rating possible) by AM Best for its financial stability. It also ranks in 67th place among Fortune 500 companies. This company commands respect due to its proven reputation and is currently a marketing partner with both AARP and Fidelity.
Policy Types
Traditional and Hybrid
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
35-75*, may vary by policy
A.M. Best Company Rating
*Note: In some states or for some health classes, this range may differ.
New York Life Long-Term Care Policy Features
New York Life offers three different long-term care policies (two traditional and one hybrid). The NYL MyCare uses a monthly coinsurance model of reimbursement that is uncommon in the industry, and it has no elimination period. SecureCare, a more customizable traditional option, has a daily reimbursement limit (amount varies by policy value) and uses a deductible rather than an elimination period before coverage begins. Asset Flex is a hybrid, fixed-premium whole life insurance policy with provisions for LTC needs.
MyCare, SecureCare, and AssetFlex all come with multiple riders and customization options, to such an extent keeping them all straight can be a bit confusing. All three policies can be purchased with inflation protection riders and a waiver of premium riders. A waiver of premium rider will allow you to continue receiving benefits without having to pay your premium if certain conditions are met. AssetFlex premiums may be paid in a lump sum or over a set number of years, and a return of premium rider may be offered to those purchasing AssetFlex.
Plan
My Care
Secure Care
Asset Flex
Type
Maximum Lifetime Benefit
$50,000 to $250,000.
Monthly or Daily Benefit Limit
Monthly 80% reimbursement of your LTC costs
Has a daily benefit limit, exact amount varies
Benefit Period
None (coverage ends when maximum lifetime benefit is used up)
Elimination Period
Deductible of $4,500 to $21,000.
Eligibility
Typically ages 35-75
Typically ages 35-75
Typically ages 35-75
Best For Traditional Policies
Mutual of Omaha, a Nebraska-based company since 1909, is one of just a few mutual companies that still sell traditional life insurance companies. While not as large as some competitors, this company still ranks among Fortune 500 companies, sitting in 282nd place. It has a respectable A+ rating from A.M. Best, the 2nd best rating available, an indication of great stability.
Many other companies have moved away from traditional policies because they are expensive for insurers to provide, but Mutual of Omaha retains two traditional policies, both of which offer a great array of customization options. We consider Mutual of Omaha as having one of the best traditional policies on the market due to its highly customizable nature and due to the fact that it can be designed to provide LTC coverage through indemnity or reimbursement payments.
Policy Types
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
A.M. Best Company Rating
*In New York, issue ages are 30-75.
Mutual of Omaha Long-Term Care Insurance Policy Features
Mutual of Omaha offers two traditional long-term care policies. The Secure Solution is the simplest option, and the Custom Solution offers a bit more flexibility, but overall the two policies are quite similar. Both Traditional LTC policies from Mutual of Omaha have the unique ability to be structured with either reimbursement or indemnity style payments. The amounts in the table below reflect reimbursement rates– maximum monthly payments for indemnity policies will typically be lower, yet will be far more practical for many people and may actually pay out more benefits in the long run, depending on your situation.
Other customizations available for these policies include several different inflation protection riders, and a wide range of maximum benefit amounts, benefit periods, and elimination periods to select from. Secure Solution and Custom Solution both provide a wide range of options to make the policy your own, though Secure Solution is said to be the simpler of the two.
Plan
Secure Solution
Custom Solution
Type
Maximum Lifetime Benefit
$50,000 to $500,000
Monthly Limit
Benefit Period
Choice of 2-5 years
Choice of 2-5 years
Elimination Period
Choice of 90, 180 days, or 365 days
Choice of 0, 30, 60, 90, 180 days, or 365 days
Eligibility**
Ages 30-79 with underwriting
Ages 30-79 with underwriting
**In New York, issue ages are 30-75.
Highest Rated Single-Pay Policy
MassMutual has been offering insurance options from its Springfield, Massachusetts headquarters since 1851. In the early 2000s, it expanded its services to Asian markets and set up a separate division to handle investment and estate planning services. This company currently ranks 123rd on the Fortune 500 list.
MassMutual is the only A++ (A.M. Best rating scale) company that offers a single-premium option for long-term care insurance. Single-premium policies can be an extremely convenient, simple option for those who have the liquidity to purchase them. While four other companies that we reviewed have similar options, this is the company with the highest financial stability rating to offer a single premium policy.
Policy Types
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
A.M. Best Company Rating
MassMutual Long-Term Care Insurance Policy Features
MassMutual essentially offers one hybrid LTC policy, CareChoice. However, this policy is available in two versions. With the CareChoice One option, you will pay a single premium for your coverage, and with ChareChocie Select, you will pay a level premium over a 12 year period. The minimum one-time premium for a CareChoice One policy is typically $25,000, which may translate to a benefit pool of roughly $50,000+, depending on policy terms. The minimum benefit pool for a Select policy is more difficult to determine, but an agent can walk you through your options.
Both policies offered by MassMutual are similar, providing a death benefit if the owner passes without using the LTC coverage. However, the benefit diminishes or is eliminated depending on how much coverage you need. These plans also offer inflation protection riders. While MassMutual sells policies in all states, exact policy limits can vary quite a bit from one location to the next.
Plan
CareChoice
(One and Select Versions)
Type
Maximum Lifetime Benefit
Minimum of about $50,000+
Monthly or Daily Benefit Amount
About $1,550-$12,400 monthly
Benefit Period
Minimum of 4 years
Elimination Period
Eligibility
Ages 35-69 (65 for tobacco users), subject to streamlined underwriting*
*In limited cases, a brief “paramedical” exam may be required as part of underwriting.
Longest Benefit Period
Recognizable by its distinctive humpback whale logo, Pacific Life is headquartered in Newport Beach, California. Currently ranking as 303 on the Fortune 500 list, this company had an astonishing 1.2 trillion dollars of life insurance in force in 2020. With a rich history dating back to 1868, it’s also one of the oldest companies currently selling LTC insurance.
Pacific Life’s hybrid long-term care options stand out among competitors due to their benefit periods. Among the companies that state a benefit period (not all do), this company offers the longest option at 8 years. Many other policies only offer benefits for a maximum of 6 or 7 years, and that extra year of coverage may make a big difference for some.
Policy Types
Number of Policies Offered
Reimbursement or Indemnity?
Issue Ages
A.M. Best Company Rating
Pacific Life Long-Term Care Insurance Policy Features
Pacific Life carries a hybrid LTC policy called PremierCare. Like most hybrid policies, this whole life option pays out LTC benefits in two parts, first through an accelerated death benefit (ABD) for two years, then through a long-term care rider for an additional 2-6 years. If unused, your beneficiary will receive a death benefit when you are gone, but if used, your beneficiaries may receive a reduced amount or nothing at all. LTC benefits can be structured as reimbursement or indemnity, and inflation protection riders of 3% or 5% can also be added to the plan. In some cases, other riders or customization options may be offered.
PremierCare policies are highly customizable, and in most states, they are currently offered in the Choice 100, Choice MAX, and Choice MAX Multipay options. The first two are “single premium” policies, so they’re great for those who have a large sum already saved. Converting some of your savings into a policy can maximize its ability to cover long-term care down the road, should you need that benefit. The Multipay option allows you to pay level premiums over a time period of 5, 10, 15, or 20 years. Choice 100 offers you the chance to get 100% of your premiums back should you decide to surrender (give up, stop paying for) the policy while living, but Choice MAX only offers 70% back. Potential customers should also be aware that international benefits are available for these policies, but typically only within the first two years of the total benefit period.
Plan
PremierCare Choice
(100, MAX, and MAX Multipay versions)
Type
Maximum Lifetime Benefit
Daily or Monthly Maximum
Often $2,500-$25,000 monthly, will vary depending on options selected
Benefit Period
Elimination Period
Eligibility
30-75 with streamlined underwriting
Long-term care insurance premiums are generally cheaper the younger you are, but if you sign up too early in life, then you’ll end up paying more premiums over time anyway. While many policies are available for those as young as 30 or 40, most experts suggest that you start looking for a policy in your late 50s or mid-60s. Insurance companies are currently reporting that their customers are signing up at younger ages than ever before, but the ideal age is typically when you are nearing retirement age.
Calculate Future Costs
It can be difficult to know how much care you will actually need, but thankfully there are plenty of helpful financial planning calculators that you can access for free online. In fact, most of the LTC insurance companies that we reviewed above host a calculator on their own websites along with articles that detail what kind of costs you’re likely to face. This LTC future costs calculator from Mutual of Omaha is a good tool to try since it includes location data and potential inflation in its calculations. Most agents recommend buying a policy with built-in compound interest of 3% or 5% so that the policy will keep pace with rising healthcare costs.
Stay Informed of Long-Term Care Trends and Economics
During this initial research phase, you may also find it helpful to familiarize yourself with news articles related to the rising costs of care. If you’re young and currently in excellent health, it can be hard to grasp what care costs could look like in the future, so getting familiar with the issues at stake can inform your decision-making. KFF (Kaiser Family Foundation) is a non-profit news source that can be helpful for researching specific trends or questions that you have.
Every LTC policy includes tradeoffs of one kind or another. For example, a traditional policy has a fairly simple structure, and in some cases very cost-effective coverage, but it is also often called a “use-it-or-lose-it” benefit. This is due to the fact that if you never need long-term care, then it is not possible to get any other kinds of benefits from the plan. You cannot know for sure if you will need years of long-term care coverage during your lifetime, so you cannot know if you’ll ever benefit from the premiums you pour into a traditional policy.
Hybrid policies tend to be more complex than traditional policies and are often a less cost-efficient form of coverage since you’re essentially paying for two different kinds of benefits in one. However, these policies give you some reassurance that, if you pass without using the LTC portion of the policy, at least your heirs will benefit from your premium payments by receiving the death benefit. Even in the simple question of whether to buy traditional or hybrid, the risks and benefits are evident, and neither policy option is going to be “perfect.” Instead of thinking in absolute terms, it’s best to think about your specific financial and personal situation.
Always look for the trade-offs in policies. If one policy offers a feature that the other does not, is there a hidden cost for that feature built into the terms? An honest agent will explain how riders or special features drive up premiums or take away other benefits. Some guarantees, such as a guaranteed 100% return of premiums if you surrender (return) the policy, may sound appealing but can trigger higher monthly payments, a shorter benefit period, or other policy limits that will reduce your access to funds. Again, such a feature may be good for your peace of mind, but never assume that it will be free.
When you get financial advice about a long-term care plan, make sure that you understand the person or organization’s financial incentives. For example, you should know whether or not you’re speaking with a captive agent. A captive agent is an insurance agent who is contractually obligated only to sell one company’s products. Such an agent can provide you with great details on policies, but they won’t be able to help you compare their company’s policies to what’s offered at other companies. It’s a good idea to get quotes from agents who are licensed to help you compare quotes from a variety of companies.
You also shouldn’t hesitate to ask any agent about administrative fees and commissions associated with the policy that is being pitched to you. It can be tempting for agents to sell the most complex, fancy-sounding policies if those policies come with higher commissions, but the fees and risks associated with some policies may not be worth it for you. This may be especially true in the realm of hybrid policies that are designed as indexed universal life insurance. Indexed policies sometimes seem to promise market-tied growth with zero risks, but the truth is they may not grow as much as advertised and their fees can be high.
Whether you select a traditional or hybrid policy, you’re buying a financial product that has a lot of different pieces. You’ll need to get quotes from multiple insurance agencies or from an agent/broker who can pull several quotes at once for you. Try your best to compare similar policies to one another so that your comparisons reflect policy value accurately.
With numerous time periods, benefit limits, riders, and care types to think about, it may be tempting to just skim the terms of the policies presented to you. It’s best to take your time and to go over anything you don’t understand with a financial advisor. Having a list of important questions to ask may also help you.
Key questions for determining the value of a policy:
After asking all these questions, it’s time to make your selection and apply for a policy. In most cases, before being approved for a policy, you will need to complete a phone interview to satisfy the insurer’s underwriting requirements. You’ll be asked various health questions, and the insurer will probably also look into your official health records.
The process of selecting and getting approved for a policy may feel overwhelming, but it’s worth taking your time to get the right policy. You can’t count on regular health insurance or Medicare for most long-term care needs, so a good LTC plan can make all the difference for your finances and your quality of life in the future.
The increase in the availability of long-term care insurance products has, in turn, led to an increase in long-term insurance scams and fraud. And since seniors are typically the ones purchasing long-term care insurance policies, many scammers target this demographic in their schemes. By educating yourself about fraud and buying your policy from a trusted provider, you can minimize your risk of being the victim of a scam.
If you’re shopping for long-term care insurance, this information will help you understand the various types of scams, how to protect yourself from fraud, and what resources are available if you’re a victim.
Long-term care insurance scams come in many different forms. Here are some of the most common types and how you can notice the warning signs.
As you shop for long-term care insurance, stay vigilant and be on the lookout for these common warning signs:
To help protect yourself against long-term care insurance fraud and scams, keep these tips in mind.
Protection Tip
