Long-Term Care Insurance

  • The cost of an extended care event could significantly impact your ability to meet your retirement income goals.
  • Long-term care insurance can help provide confidence knowing you are protecting your hard earned assets.
  • It’s a common misconception Medicare will cover the costs of care. But Medicare won’t fund the cost of an extended care stay.

What could happen in the long run?

With longer life spans, the likelihood you will need some type of long-term care is significant. In fact, someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years.1

The long-term effects of a chronic illness such as stroke, heart attack, cancer, and diabetes, are common culprits leading to nursing care. In your advanced years, even slips, trips, and falls can land you in rehabilitation or under nursing care.

Medicare doesn’t cover everything

It’s a common misconception Medicare will take care of all care costs after age 65. There are many costs Medicare doesn’t cover.

The cost for long-term care insurance typically rises with age.

For example, Medicare won’t fund the cost of an indefinite stay in a nursing facility. It will not cover the cost of assisted living or adult daycare. If you would need daily assistance with eating, bathing, and dressing in your own home, Medicare doesn’t cover these services either.

Find the annual average cost of care for your area2 for a nursing facility, home health care, adult day care, or assisted living.

Could your finances withstand a multi-year nursing home stay? If not, long-term care insurance is worth considering. Benefits are available through a policy to cover the costs of nursing care. You could access coverage for care in your own home or an approved health facility.

Retaining or transferring the risk

Many people acquire long-term care insurance to help protect their retirement assets. Perhaps a spouse or partner is dependent on those same assets for income. What would happen to the spouse or partner if the assets were exhausted to pay for care? By retaining the risk, you are stating you will use all of your assets to pay for care should it be needed.

On the other hand, transferring the risk to an insurance company will help protect you from high future costs. Let’s say you or your spouse or partner suffered a devastating illness and needed extended nursing care. A long-term care policy would help protect your savings from the expenses of an extended-care event.

What long-term care insurance generally covers

Infographic - The average cost of a nursing home stay is $91,615* Annually for a semi-private room, *John Hancock's 2016 Cost of Care Survey, conducted by LifePlan.

Most long-term care policies provide a daily or monthly benefit amount that can be applied to a variety of settings, including:

  • Your home
  • Adult day service centers
  • Hospice care
  • Respite care
  • Assisted living facilities (also called residential care facilities or alternate care facilities)
  • Alzheimer’s special care facilities
  • Nursing homes

In the home setting, comprehensive polices generally cover these services:

  • Skilled nursing care
  • Occupational, speech, physical, and rehabilitation therapy
  • Help with personal care, such as bathing and dressing

Are you a candidate for long-term care insurance?

Long-term care insurance is not for everyone. It may be for you if you:

  • Fear the cost of an extended illness.
  • Have other close family members who have needed nursing care.
  • Have a family history of chronic illness.
  • Have accumulated assets, such as savings, investments, and qualified retirement plans, that you or your spouse, partner, or dependents rely on. These assets could be at risk if you were faced with needing long-term care services or support.

If your assets fall below a certain threshold, you may find the cost of the premium to be cost-prohibitive in retirement.

At the other end of the spectrum, you may have sufficient assets to cover the effects of an extended illness. Even if you do, long-term care insurance may give you an added level of financial protection and the ability to create leverage and protect your assets more efficiently.

Long-term care insurance may give you an added level of financial protection.

This way, you don’t have to disrupt your assets or income plan to provide the care you want. These policies may help protect your assets so your spouse has the income in retirement they need and potentially leave a financial legacy for your heirs.

Your Financial Advisor can help you model various scenarios to be sure you have the bases covered.

When is the right time?

While there may not be a specific “right” time, in general sooner is better than later. This is true for three primary reasons:

  1. The younger you are the more likely you will be healthy enough to qualify for coverage.
  2. Purchasing coverage during your peak earning years may allow you to fully fund your coverage before you retire.
  3. The cost of long-term coverage typically rises with age.

Your cost is based on your age, health, and what the policy covers. There are a variety of options and many types of long-term policies.

You can choose from features that fit your specific needs and family situation. If you are married, you can buy one individual policy or share one with your spouse. If you share one, you will find the cost is less than two individual policies.

Perhaps you prefer coverage that would pay a death benefit to your heirs if care is never needed. Maybe the death benefit is your primary focus, but you would like to know you could access it during your lifetime for care. There are a variety of potential strategies available to help meet your unique goals.

Next steps

  • The cost of long-term care is based on your age, health, and the amount of coverage available for care. Look into the variety of options and types of long-term policies.
  • Find out what’s covered, what’s not. You face a lot of choices when selecting an insurance policy.
  • You can buy individual policies, or in some cases share a policy with your spouse.

1How Much Care Will You Need?, U.S. Department of Health and Human Services (accessed 1/11/18).
2John Hancock’s Cost of Care Study, conducted by LifePlans, Inc., 2016.

Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.