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The Best Long-Term Care Insurance…

The Best Long-Term Care Insurance

Insurance is personal, with coverage and premiums highly dependent on individual circumstances. Because of this, it’s best to get quotes from a few companies and compare the coverage options that matter most to you. Our top picks are a great place to get started.

The 3 Best Long-Term Care Insurance Providers

Best for
Robust Coverage

Mutual of Omaha

Mutual of Omaha

Standout coverage and flexible policies, plus exceptional provisions that come standard.

Pros
Flexibility
Quick access to benefits
Independent home caregivers covered

Cons
Complex range of options

Why we chose it

Flexibility

In choosing our top picks, we prioritized flexibility — from designing a policy to total benefit amounts and how they’re dispersed. All three of our picks excel, but none more than Mutual of Omaha, which offers benefit periods of two to five years, as well as the alternative “pool of money” model (up to $500,000). This gives policyholders more choice in their policy design than any of our other finalists.

Quick access to benefits

Mutual of Omaha is our only top pick to count its Elimination Period in calendar days instead of service days, which means policyholders can get access to their benefits faster. (What is an Elimination Period? Read our answer below.) It’s a thoughtful touch that’s standard with the company.

Independent home caregivers covered

Your caregivers don’t need to be from an expensive agency in order to receive payment from Mutual of Omaha. Home care services (such as health aide visits) are also not subject to the Elimination Period at all — they’re covered as soon as you need them. And Mutual of Omaha’s “cash alternative” payout can also be up to 40% of your policy’s maximum monthly benefit, which is 10% higher than our other finalists’. That means if your care costs are low in a given month, you can opt for a check equal to 40% of your policy’s monthly maximum in lieu of other benefits. You can spend that cash on anything, not just covered services — another nice measure of flexibility.

Points to consider

Complex range of options

In addition to the company’s vast repertoire of plan options, you also have premium and payout specifics to decide on. While this range of options is something we loved about the company, Mutual of Omaha’s spread of services may leave you feeling overwhelmed if you’re not insurace-savvy. If this is the case, it may be time to turn to a broker. An independent agent is often the best way to make sure you thoroughly compare your options. The Society of Financial Service Professionals can help you find one you can trust.

Best for
Affordable Policies

Transamerica

Transamerica

Exceptional flexibility when it comes to benefit amount and how you receive it, though a few drawbacks may make it less valuable in the long term.

Pros
Small benefit amounts
“Pool of money” model
Competitive cash alternative

Cons
Requires agency caregivers

Why we chose it

Small benefit amounts

Transamerica is a solid option for long-term care insurance, and it’s an especially good choice if you are looking for a modest policy — one to supplement, not shoulder, future financial burdens when it comes to healthcare. The company offers total benefit amounts as small as $18,250. Small benefits means greater affordability.

‘Pool of money’ model

Transamerica uses the flexible “pool of money” model to define its policies’ benefits instead of years of care. This means that if a debilitating injury or surgery requires more intensive care one year and much lighter care the next, the pool of money can be drained as needed without yearly caps.

Competitive cash alternative

While Transamerica’s standard features are slightly less generous than Mutual of Omaha’s, it too boasts a zero-day waiting period for home care, reimbursing those costs as soon as you first have a need for them. And its monthly cash alternative caps at 30% of the policy’s maximum monthly value, not much less than Mutual of Omaha’s 40%.

Points to consider

Requires agency caregivers

Transamerica requires that you receive in-home care from agency-affiliated caregivers before paying out. Because agency services are likely more expensive than an independent caregiver would be, this stipulation could drain your benefits more quickly.

Best for
Extended Care

MassMutual

MassMutual

The best financial strength ratings of our top picks, but with a thinner spread of policy offerings.

Pros
Long benefit period
Financial strength
Independent home caregivers covered

Cons
Missing policy options

Why we chose it

Long benefit period

MassMutual offers the only six-year benefit period of our top three insurers. While the general rule — shorter benefit period/lower rates, longer benefit period/higher rates — applies, a lengthy plan could prove vital if a late-in-life illness leads to prolonged bed rest. A generous time frame means that paying for the care you need won’t weigh heavy on your mind.

Financial strength

MassMutual claims the best financial strength ratings of all of our finalists, meaning it has a proven track record of solvency and a confident outlook. You can rest assured that MassMutual will make good on its claims for as long as you need its payouts, and beyond.

Independent home caregivers covered

Like Mutual of Omaha, MassMutual will foot the bill for in-home care even if the caregiver you secure isn’t affiliated with a larger agency. This is an important point, since shopping around for independent caregivers could mean getting all the help you need for a more reasonable rate.

Points to consider

Missing policy options

MassMutual fell short of both Mutual of Omaha and Transamerica in terms of useful policy options. The zero-day waiting period for home care (standard with our other top picks) is an optional extra with MassMutual. Additionally, there is no “pool of money” option, and there’s also no “cash alternative” benefit, meaning you have to submit receipts for absolutely everything. One final drawback: The Shared Care rider is only available with the shorter plans (two- and three-year benefit periods). If any of these policy options are especially important, you may be better off with one of our other picks.

Guide to Long-Term Care Insurance

How to shop for long-term healthcare insurance

Consider future need

We all need help as we get older, though how much help is impossible to predict. The US Department of Health and Human Services estimates that 70% of all Americans 65 and older will need some kind of long-term healthcare during their lifetime. The average need for care in the US is currently about three years, but 20% need it for more than five. The most expensive scenario is a nursing home (with average annual costs currently around $90,000 per year), but having weekly or daily assistance in your home can still require tens of thousands of dollars annually. It makes sense to insure yourself for at least two to three years of care, if you can afford it.

Start early

Addressing the need for care sooner rather than later can make a huge difference in both your peace of mind and your bank account. The older you get, the more you’ll pay in premiums (and the more likely it is that you’ll develop a condition that makes getting covered more difficult). Lenny Robbins, a licensed life insurance broker with LifeNet Insurance Solutions, suggests, “Your early 50s are an ideal time to investigate your options for long-term care.”

Choose your policy type

If you’re worried you might never use the benefits in a traditional long-term care policy, a hybrid that combines LTC with life insurance might be more appealing. Such policies secure a benefit no matter what — either in the form of care for you or cash for your loved ones. There’s also no danger of premiums going up unexpectedly.

However, there are trade-offs. For one, most hybrid products have a higher upfront cost: They require either a large one-time payment or a shorter set payment term (10 years is typical). And even if you have the cash available (a meaningful LTC benefit will require between $50,000 to $75,000 in total premium), paying it sooner means it’s not available to earn interest elsewhere. If you do end up needing care, the death benefit will decrease as a result, leaving your heirs with less.

You should address your respective needs for life insurance and long-term care insurance in their order of urgency. If you’re 55 or older and shopping primarily for life insurance, you may want to read our review on the best life insurance for seniors, but keep in mind that the accelerated death benefits we discuss may not cover all of your long-term care needs.

Decide if you can afford to protect against inflation

Buying insurance is about removing financial risk from your life, and inflation is a legitimate risk to your policy’s future value. Think of it this way: At 3% annual inflation, the care you can get today for $200,000 will cost $268,783 in 10 years and $361,222 in 20 years. That’s why it’s worth considering a 3% inflation rider.

Long-Term Care Insurance FAQ

What is an Elimination Period?

A long-term care policy’s Elimination Period is the length of time you have to wait to receive benefits after your claim is opened. The longer the period, the cheaper the policy, since it means you’ll be paying out-of-pocket longer before benefits kick in. The most common length is 90 days.

Most LTC policies count off the elimination period in terms of “service days,” requiring you to prove that you received a service on a given day for it to count toward the total. “Calendar days,” on the other hand, means that if you have a 90-day Elimination Period, your benefits will begin exactly 90 calendar days after your claim is approved, whether or not you needed (and paid for) care each day. This not only takes away the hassle of submitting receipts, but also can save you money and effectively shorten the waiting period.

How much will long-term care insurance cost?

The short answer: It depends. The factors that impact premiums vary too much from person to person for us to recommend a provider based on price. Still, knowing which elements carry weight can help inform your policy search. For LTC insurance, premiums depend most on five things:

  • Your health and age when you buy the policy
  • The policy’s benefit period, either in years or total dollars
  • The maximum daily or monthly benefit
  • The Elimination Period
  • Optional riders, such as Inflation Protection

The American Association for Long-Term Care Insurance found that 2016 rates for identical coverage varied by as much as 94% from one insurer to the next. Our advice: Shop around to find the coverage you want at a price you like. Our top picks are a great place to start.

Will long-term care insurance premiums increase year to year?

Premiums for traditional LTC policies surged in recent years as companies began to learn the true cost of claims, which they grossly underestimated when first selling policies in the 1980s and 1990s. Several companies – including big names like John Hancock and MetLife – ditched LTC insurance entirely as a result. In addition, some policyholders were also hit with unexpected premium hikes, a particularly maddening twist for older folks who had to pay more, reduce their benefits, or drop their long-held policies.

However, new research by the Society of Actuaries says that the threat has largely passed: With more data to guide pricing, policies sold in 2014 have just a 10% chance of needing future rate increases, compared with 40% for those sold in 2000. It’s also helpful to know that premiums can never go up due to a decline in your personal health — only for an entire group of insured people because of higher-than-expected claims, and only after a state insurance department approves the increase.

Does where I live impact long-term costs?

Long-term care costs vary significantly from state to state, based on things like the availability of caregivers and nursing homes, so it helps to plan for the region where you expect to retire. Genworth provides an interactive map to help you calculate the cost of care in your state.

How does long-term care insurance work?

When considering long-term care insurance, your first thought might be of a company footing the bill for a nursing home or an assisted living facility. But there are plenty of scenarios in which you’d need long-term care in your home, such as following a temporary injury or a stroke. These periods can still be expensive, which is why standard LTC insurance also covers visiting nurses, home health aides (who assist in bathing, dressing, and preparing meals), visitor programs, chore services, adult day care, and home-delivered meals.

Many seniors mistakenly think that Medicare will pay for their long-term care, when in reality it only covers a fraction of the services they’re likely to need. The biggest thing to know is that very few “unskilled” services (things like adult day care or home aide visits) are covered by Medicare, and even things like skilled nursing and hospital stays max out at 100 days.

The Best Long-Term Care Insurance: Summed Up

Mutual of Omaha
Transamerica
MassMutual
Best for
Robust Coverage
Affordable Policies
Extended Care
States licensed
49
50
50
A.M. Best rating
A+
A+
A++
S&P Global rating
AA-
AA-
AA+
Moody’s rating
A1
A1
Aa2

Our Other Life Insurance Reviews

We have spent years tracking down the best providers for all types of insurance products. Whatever your future care needs are, we know someone in the business.


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