Back > Financial Literacy  > How Much Does Long-Term Care Insurance Cost per Month?

How Much Does Long-Term Care Insurance Cost per Month?

Long-term care insurance is a financial safeguard that helps individuals plan for the expenses associated with extended medical care and support as they age. Research shows long-term care insurance averages about $2,700 annually. That is around $225 monthly. However, the cost of long-term care insurance varies significantly from person to person and is influenced by various factors. These include your age, health, location, the specific policy, and even your gender.

In fact, it’s important to note that because women typically live longer than men they pay higher premiums than men for long-term care insurance.

Understanding Long-Term Care Insurance

Long-term care insurance is designed to cover the costs of care in a variety of settings, including in-home care, assisted living facilities, nursing homes, and more. This type of insurance can help policyholders receive the necessary assistance with daily activities such as bathing, dressing, eating, and medication management when they can no longer do so independently. Long-term care insurance can also provide peace of mind to individuals who wish to protect their assets and prevent a significant financial burden on their loved ones.

Factors Influencing Long-Term Care Insurance Costs

The cost of long-term care insurance can vary widely due to several factors, and it’s essential to understand these variables when considering a policy. Here are some of the main factors that influence long-term care insurance costs:

  1. Age: Your age when you purchase a long-term care insurance policy is a significant factor in determining the premium. Generally, younger individuals pay lower premiums than those who purchase coverage later in life.
  2. Health: Your current health and medical history play a crucial role in the cost of long-term care insurance. Individuals in better health often pay less for their premiums, while those with pre-existing medical conditions may face higher costs or even difficulty obtaining coverage.
  3. Location: Where you live also impacts your long-term care insurance premium. Costs for care services can vary significantly by region, and insurance companies’ factor in these regional differences when calculating premiums.
  4. Benefit amount and duration: The amount of coverage you select and the length of time the policy will pay for care services affect your premium. Policies with higher daily or monthly benefit amounts and longer benefit periods generally come with higher premiums.
  5. Elimination period: The elimination period refers to the waiting period before your coverage begins to pay for care services. A shorter elimination period typically results in a higher premium.
  6. Inflation protection: Opting for inflation protection within your policy ensures that your benefits keep up with the rising costs of care. However, this feature can increase your premium significantly.
  7. Gender Disparities in Long-Term Care Insurance Premiums: Gender plays a notable role in the cost of long-term care insurance. In most cases, women pay higher premiums than men for similar coverage. This disparity arises from several factors, and it’s important to understand why women may face higher costs.
  8. Longer life expectancy: Statistically, women tend to live longer than men. With a longer life expectancy, women have a higher probability of requiring long-term care services at some point in their lives. Insurance companies consider this greater likelihood when pricing their policies.
  9. Higher utilization of care: Women typically make up a larger percentage of those who require long-term care. This increased utilization of care services contributes to the higher costs associated with insuring women.
  10. Longer duration of care: When women do require long-term care, they often need it for a longer duration. This extended period of care can lead to higher insurance costs.
  11. Gender-based pricing regulations: In the United States, many states permit insurance companies to use gender as a rating factor in determining long-term care insurance premiums. This is a legally accepted practice, as long as it is actuarially justified and does not result in unfair discrimination.

It’s important to note that not all insurance companies impose gender-based pricing, and the extent of the disparity can vary. Some insurers might apply it more rigorously than others, making it essential to compare quotes from multiple companies when seeking coverage.

Tips for Managing Long-Term Care Insurance Costs

Some may face higher long-term care insurance premiums, there are strategies to manage and potentially reduce these costs:

“Shop around” says Daniel Lerner Executive Vice President, Investment Services of David Lerner Associates, “Obtain quotes from multiple insurance companies to find the best rates and policies that suit your needs. You could also consider a partnership program. Some states offer Long-Term Care Partnership Programs that provide additional asset protection in exchange for specific policy features.”

  • Opt for a shorter benefit period: If a longer benefit period is driving up your premium, consider choosing a shorter one. However, ensure that it aligns with your anticipated needs and budget.
  • Review policy riders: Evaluate whether riders like inflation protection are necessary for your individual circumstances. Eliminating certain riders can help lower your premium.
  • Keep your health in check: Maintaining good health can lead to more favorable premiums. Consider regular exercise, a healthy diet, and preventive healthcare measures.

Long-term care insurance is a valuable tool for securing your financial well-being in the face of potential long-term care needs. However, it’s crucial to understand the various factors that affect the cost of coverage, including gender-based pricing disparities. While women generally pay higher premiums due to factors like longer life expectancy and greater utilization of care services, there are strategies for managing these costs and finding affordable coverage. Ultimately, the decision to invest in long-term care insurance should align with your individual needs, preferences, and financial circumstances.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Your Investment Counselor

Skip to content