Long-term care insurance helps cover the cost of long-term care, including in-home care, assisted living, and nursing home care. According to the National Association of Insurance Commissioners (NAIC), about 7.5 million Americans had long-term care insurance policies in 2019.

There are several reasons to purchase long-term care insurance. For one thing, it can help to offset the high cost of long-term care, which can easily exceed $100,000 per year. Additionally, long-term care insurance may help protect assets if someone needs to receive long-term care.

Many people are surprised to learn that Medicare does not cover the cost of long-term care. As a result, individuals without private long-term care insurance or another form of coverage may need to pay for long-term care out of their pockets. Given the high cost of long-term care, this can be a daunting prospect for many people.

The Benefits of Long-Term Care Insurance.

• It can help you maintain your independence.
• If you need assistance with daily activities, long-term care insurance may pay for in-home care or assisted living.
• This means you could stay in your own home rather than move into a nursing home.
• Long-term care insurance may also help reduce the financial burden on your family if they would otherwise have to pay for your care.

How Does Long-Term Care Insurance Work?

Most long-term care policies have a daily or monthly benefit amount. You may use this money to pay for in-home care, assisted living, or nursing home costs. Some guidelines also have a maximum benefit amount, the total amount the policy will pay out over your lifetime.

Most policies will require you to meet a certain level of need to qualify for benefits. This is usually measured by activities of daily living (ADL) score. An ADL score includes eating, bathing, dressing, and restroom use. You might likely qualify for benefits if you cannot do two or more of these activities on your own.

When shopping for long-term care insurance:

• Be sure the policy covers in-home care and nursing home care.
• Pay attention to the policy's benefits to ensure it meets your needs.
• Don't wait until care is needed to buy a policy; it will be more expensive if you do so when you're older. It's best to purchase long-term care insurance when you're younger and in good health.

How to pay for long-term care insurance.

• With your own money
• Pre-tax money from a flexible spending account (FSA) or health savings account (HSA)
• Fund a long-term care rider with life insurance

No matter how you fund your long-term care, you must ensure that you are prepared for the future. Long-term care may be pricey, but it is essential to have a plan in place, so you are not left with a hefty bill. Talk to an insurance agent about what options are available to you and how you can best prepare for the future.