What is long-term care insurance good for?

Long-term care insurance is good for far more than simply paying for nursing homes. MASKOT/GETTY IMAGES

You have a nearly 70% chance of needing some form of long-term care by the time you turn 65, and that care can be expensive. If you’ve looked into how you’ll pay for it, you may have come across the option for long-term care insurance.

This unique type of insurance is designed to help cover the large and growing cost of long-term care. But what exactly does that mean? Does it mean you’ll need to be confined to a nursing home or assisted living community before your benefits kick in, or is long-term care insurance good for something else?

You might be surprised at the ways this type of insurance can help you as you age. Moreover, the benefit of this insurance may extend to your loved ones.

What is long-term care insurance good for?

In general, long-term care insurance is important for most people.

“Since those who reach age 65 have a 70% chance of needing care, planning is needed,” says John Hill, president of Gateway Retirement.

Long-term care insurance could help you with that planning process. But what exactly is long-term care insurance good for? Here are a few things coverage could help with:

To help cover the cost of aging in place

There’s a widespread misconception that long-term care insurance is only for people who plan on moving into a nursing home or assisted living facility. That’s not exactly true. It is true that some plans only provide coverage if you move into one of these facilities, but there are plenty of other plans that can help you age in place. These plans can come with coverage features like:

  • Home renovations: Some long-term care insurance policies may help with the cost of home renovations to make your home more accessible as you age. For example, these policies may help with the cost of installing a ramp to your front door or handles in your bathroom.
  • Equipment: Long-term care insurance policies may also help cover the cost of the equipment that makes it possible for you to age in place.
  • Care: Long-term care insurance can help cover the cost of home healthcare as well. It could even pay your family members to provide your care.

To pay for a skilled nursing home

Even if aging in place is your plan, there may be a time when a skilled nursing home is the more feasible option. After all, even if your family members have intentions of handling your care, medical conditions may lead to a need for around-the-clock skilled medical care. At this point, a nursing home is typically the best option.

On the other hand, nursing homes can be expensive. According to the American Council On Aging, the cost of a nursing home can easily exceed $100,000 per year. Long-term care insurance can help cover this expense, potentially preserving your privacy, your dignity and your ability to choose as you age.

To ease the burden of care on your loved ones

Long-term care insurance is especially important if you plan on aging in place with family caregivers. There are a few ways this type of insurance helps in this scenario:

  • Adult daycare: Your family members may not be able to provide 24-hour care. After all, they may have their careers to maintain or need time off every once in a while. Adult daycare facilities can provide the care you need during these times, but they can also be expensive. Long-term care insurance may help cover this expense.
  • Family caregivers: It’s important to try and provide compensation for your family caregivers. Sure, they’re willing to provide your care out of love, but offering payment makes it more rewarding for them to do so. Long-term care insurance may give you a way to pay your family caregivers. However, if that’s your plan, be sure that the policy you purchase covers both formal and informal caregivers.
  • Skilled care: At some point, you may need care that goes above and beyond the skills your family members have. At this point, you’ll likely need in-home skilled care or a skilled nursing facility. Your family may struggle to find a way to help you cover these costs if you haven’t already planned for them. Long-term care insurance can help ease this burden.

The bottom line

Long-term care insurance is a good way to plan for countless potential circumstances. The simple fact is that when you turn 65 the chance that you’ll need some form of care tends to increase. With that in mind, it’s a wise idea to plan for the cost of this care with long-term care insurance.