Is long-term care insurance worth it?

If you needed daily support as you got older, who would provide that for you? Many people cite their loved ones. And while family support is often an option, is that the right option for your family? 60% of family caregivers also work a full- or part-time job, and 40% of them cite juggling those two parts of life as the biggest cause of emotional stress.¹ But if, instead, you lean on paid services for support, you or your family could face daunting long-term care costs.

That's why it may be beneficial to consider long-term care insurance. This type of coverage typically can reimburse you for care you receive in your home, assisted living/residential care facilities, nursing homes, memory care facilities, adult day care or hospice care.

So is long-term care insurance worth it for you and your family? Here are some of its advantages.

If you one day need help with daily tasks—getting in and out of bed, bathing, getting dressed and using the bathroom—or perhaps require nursing care, the financial and emotional impact on your family can be significant. Long-term care insurance can help in a number of ways.

The costs of long-term care can be staggering. For example, the average cost for an assisted living facility is $3,628 a month, according to the latest data from the U.S. Department of Health & Human Services. Nursing homes are even more expensive, with a monthly cost of $7,698 nationwide.² Even if you're able to stay in your home, the cost of hiring professional caregivers and making modifications to your living space can add up quickly.

Long-term care insurance offers a way to protect your retirement assets and your family's income from the costs of care. Government programs don't cover all the costs. Medicare only pays for short-term stays in a nursing facility—and only under certain conditions. Medicaid, meanwhile, is only available to families who meet income and asset requirements.

When daily assistance is needed, informal caregivers often have to step in. In fact, according to a 2022 Thrivent Extended Care survey,³ more than half of adults said a spouse or other family member would have to provide assistance if they needed long-term care. That can be a challenge for loved ones who often have other responsibilities, such as a job or young children.

A long-term care insurance contract allows your family to supervise your care, while letting professionals provide the care. It helps pay for outside caregivers, and some contracts even cover a care coordinator to develop a plan of care and regularly monitor your needs. These professionals also help identify care providers and resources in your area.

In some cases, you may simply prefer to have someone you know handle your care even if you can afford a health care aide. Some long-term care insurance may cover caregiver training from a health care professional. Some contracts also cover respite care for informal caregivers, so your loved ones can have time away when needed.

Long-term care contracts reimburse for qualified long-term care services in and outside the home, giving you greater choice in how and where you receive care. For example, while you may want to remain in the comfort of your own home, you might need to adapt it to fit your care needs. Some long-term care contracts will cover such modifications and equipment.

If your situation changes and you need to go to a nursing home, you have that option, too. Some contracts will cover the costs of reserving a bed for you in a qualified facility.

You'll also have your choice of type of facility. Long-term care insurance typically covers an array of nursing homes and assisted living/residential care facilities, whereas many government assistance programs only offer limited choices.

Depending on your insurer, you may be able to tailor your long-term care plan even more with additional riders, such as a cash benefit rider that can cover informal caregiver pay or other financial needs. Other types of riders benefit your spouse or pay out lump sums to your beneficiaries.

If a full long-term care contract doesn't feel like exactly the right fit, another option is combined life and long-term care insurance. These hybrid policies pay a death benefit to your beneficiaries if you don't use your available long-term care benefits.

Long-term care insurance will reimburse you for eligible expenses you incur for qualifying care that can be provided at home or by a community-based service (like an adult day care) - or at a nursing facility or residential care facility.

To be eligible for benefits, you'll need a plan of care (updated periodically) from a healthcare professional stating (1) that you require substantial supervision because you have a severe cognitive impairment, or (2) that you are unable to perform at least two Activities of Daily Living for at least 90 days. Activities of Daily Living are eating, bathing, dressing, toileting, transferring (to or from a bed or a chair), and caring for incontinence.

You'll pay the cost of care yourself for the first few months. (That's called the elimination period, and it can vary by policy - usually it's 30-90 days. Most policies require you to satisfy the elimination period only once.) After that, long-term care insurance will reimburse you for covered costs. Long-term care insurance has a daily or monthly limit on how much it will pay for reimbursable expenses, plus a lifetime limit on total payouts. Some insurers have separate limits depending on where you receive care - at home or in a facility.

When the claims process is initiated and the provider contact information is provided to us, a claims coordinator will obtain the information from the providers necessary to complete the claim review.

While a long-term care contract is in your name, you're really taking out insurance to protect your family's financial and emotional well-being. That reassurance can go a long way, but there are still certain considerations around buying long-term care insurance.

• With age comes an increased risk of health conditions that may prevent you from getting coverage.
• The more ideal time to buy this insurance—when you're young and healthy—may be when you're more financially focused on other needs, like raising a family.
• You may end up not needing long-term care. (You may want to consider a hybrid policy, in this case.)

The decision comes down to what best fits your larger financial outlook. As you weigh how long-term care insurance fits into your plan, you may wish to discuss questions with a Thrivent financial advisor, who can help set the right roadmap for you.