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Key takeaways

  • Long-term care insurance helps cover costs for daily living assistance, which isn't typically paid for by standard health insurance or Medicare.

  • There are different types of policies, including traditional "use it or lose it" plans and hybrid options that combine long-term care benefits with life insurance.

  • Purchasing a policy earlier in life, generally in your 50s, can result in lower premiums and is often more affordable than waiting until you’re older or have health issues.

It’s a reality many Americans will face: nearly 70% of people turning 65 today will need long-term care at some point. 1 While the need is common, figuring out how to pay for it can be a challenge.

That's where long-term care insurance comes in. It’s designed to help cover expenses that traditional health insurance and Medicare typically don't. This guide will walk you through what long-term care insurance is, the types of policies available, and how it can fit into your financial strategy.

What is long term care insurance?

Long-term care insurance provides benefits for a wide range of services designed to help with the basic needs of daily living over an extended period. These are often called "activities of daily living" (ADLs) and include tasks like bathing, dressing, eating, and moving safely around your home.

Most people think of nursing homes when they hear "long-term care," but the majority of care (65%) is actually received at home. 1 Long-term care insurance can help you receive care in your preferred setting, whether that’s at home, in an assisted living facility, or a nursing home. It can also help protect your savings from being depleted by long-term care costs and relieve financial and caregiving pressure on your family.

What types of long-term care insurance are available?

There are several types of long-term care insurance policies, each with different features and benefits. The two main categories are traditional policies and hybrid policies.

Long-term care insurance can help you receive care in your preferred setting, whether that’s at home, in an assisted living facility, or a nursing home. It can also help protect your savings and relieve financial and caregiving pressure on your family.

Traditional long-term care insurance

This is a standalone policy designed solely to cover long-term care services. It's often a "use it or lose it" plan, meaning if you never need long-term care, you don't get back the premiums you paid. These policies typically pay a predetermined daily or monthly amount for services, up to a lifetime limit.

Hybrid long-term care insurance

Hybrid policies combine long-term care coverage with another financial product, usually life insurance. These have become popular because they offer more flexibility than traditional plans.

  • Hybrid life and long-term care insurance: This policy combines permanent life insurance with long-term care benefits. If you need care, you can access the policy's benefits. If you pass away without using the long-term care portion, your beneficiaries receive a life insurance death benefit. Many of these policies also allow you to surrender the policy and receive a cash value, and the premiums are typically guaranteed not to change.
  • Permanent life Insurance with a long-term care rider: This is another option where a long-term care benefit is added to a permanent life insurance policy. This might be a good fit if your primary goal is to leave a significant death benefit for your beneficiaries, with the long-term care coverage serving as an added layer of protection.

How much does long-term care insurance cost?

The pricing of long-term care insurance depends on several factors, including your age and health when you purchase the policy, the daily benefit amount you choose, and the length of your coverage.

It’s generally more affordable to buy a policy when you're younger and in good health, typically in your 50s. The younger you are, the lower your premiums will be. For example, according to a survey from the American Association for Long-Term Care Insurance, a couple today, both age 55, would pay an average annual premium of $2,080 combined for an initial policy benefit of $165,000. If that same couple waited until age 65, the premium would increase to $3,750 per year. 2

Do I need long-term care insurance?

Planning for long-term care is an essential part of a comprehensive financial strategy. Here are a few key reasons to consider purchasing long-term care insurance.

Long-term care insurance covers a broad range of care services.

Long-term care service options include home health care, adult day care, assisted living facilities and nursing homes.

Long-term care insurance can protect your savings.

The costs of long-term care can be substantial. The average cost for an assisted living community is over $70,000 per year, while a semi-private room in a nursing home averages over $111,000 per year. 3 These long-term care costs are projected to more than double by 2053, 3 potentially depleting your retirement savings quickly.

Long-term care insurance can fill coverage gaps.

Medicare coverage does not include most long-term custodial care. It may cover short-term skilled care in a nursing home after a hospital stay (up to 100 days), but it doesn't cover ongoing assistance with daily activities.

Long-term care insurance can reduce the financial and emotional burden on family.

Caregiving can place a significant financial and emotional strain on loved ones. In fact, 47% of caregivers report experiencing a negative financial impact as a result. 4 Long-term care insurance can provide funds to hire professional help, reducing the burden on family members who may live far away or have other obligations.

Planning for long-term care now can provide peace of mind for the future. Consider working with a financial advisor to understand how traditional or hybrid long-term care insurance policies might fit into your retirement strategy.

 

Learn about insurance protection through U.S. Bancorp Investments.

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Financial planning
Insurance
Retirement

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Disclosures

  1. “How much care will you need?,” LongTermCare.gov.

  2. Long-term Care Insurance Facts, 2025, American Association for Long-Term Care Insurance.

  3. Cost of Care Survey, Genworth/CareScout.

  4. Caregiving in the US, National Alliance for Caregiving (NAC) and AARP.

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Investment and insurance products and services including annuities are:
Not a deposit • Not FDIC insured • May lose value • Not bank guaranteed • Not insured by any federal government agency.

U.S. Wealth Management – U.S. Bancorp Investments is a marketing logo for U.S. Bancorp Investments.

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Investment and insurance products and services including annuities are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

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