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Is Assisted Living Insurance Worth It?
Date Updated: July 26, 2024
Written by:
Jackie Smart is an author and freelance content writer. For the past five years, she has written on numerous subjects, especially senior living, drawing on her own experiences of researching assisted living for an elderly relative. Jackie has since written extensively on the subject, focusing on how older adults can find help accessing services and the resources and programs in place to help them finance their long-term care.
Reviewed by:
Kristi Bickmann, a licensed Long-Term Care Specialist, represents top-rated "Traditional" & "Hybrid" LTC companies. Serving associations such as the American Nurses Association, she's a licensed insurance agent in 27 states. Specializing in insurance products for seniors, Kristi helps hundreds of families every year protect assets, retirement, and loved ones. She understands aging concerns firsthand, having assisted her own parents. Kristi ensures accuracy on topics about senior long-term care and its consequences.
Assisted living insurance is worth it for some seniors, depending on individual circumstances. Approximately 70% of American adults will require some form of long-term care in their lifetime. With costs averaging $54,000 per year, people need to consider how they will finance their future care.
Medicare covers some services provided by residential communities, but it doesn’t pay for bed, board and non-skilled services, including assistance with the activities of daily living. Assisted living insurance, or long-term care insurance (LTCI), is one option that seniors should consider when they have the opportunity to plan for their future.The cost of assisted living insurance
The cost of long-term care insurance varies depending on several factors, including gender, age, family history, health status and marital status. A 2021 survey by the American Association for Long-Term Care Insurance lists the annual premium for a 55-year-old adult buying an initial $165,000 in benefits as:
- Male: $950
- Female: $1,500
- Couple: $2,080 combined
These premiums increase with age, as a 65-year-old can expect annual fees of:
- Male: $1,700
- Female: 2,700
- Couple: $3,750 combined
Most adults will pay premiums for several years before making a claim, and both premiums and benefits may increase annually with inflation.
Who benefits from assisted living insurance?
Many seniors self-pay for assisted living, using savings or selling assets such as their home to free up cash. If you have a healthy nest egg or assets you wish to use for other purposes or pass on to your children, you could benefit from taking out LTCI.
By covering the costs of long-term care, these policies protect your savings instead of you having to use them for your care.
When LTCI is not worth it
Seniors requiring long-term care due to existing health conditions often struggle to find coverage, and when available, face high premiums. Assisted living insurance can significantly strain finances.
LTCI also makes little sense for older adults on low incomes. Those who meet certain income criteria are eligible for Medicaid or Medicaid waivers. This coverage helps pay for long-term care.