By Marc Gilman
📞 (800) 927-9326 |
This is Part 3 of a 3-part series on long-term care insurance. Part 1 covered what long-term care insurance is and why people get it. Part 2 covered the different types available — traditional, hybrid, and alternatives for those who can’t qualify.
Once you’ve decided that long-term care insurance makes sense for your situation, the next question is how to compare policies. Two policies from different carriers can look similar on the surface and be very different where it counts.
Here’s what to pay attention to — and what it means in plain language.
Key Takeaways
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The benefit period determines how long your policy will pay. Most people choose two to five years. An unlimited lifetime benefit exists but costs significantly more.
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The daily or monthly benefit amount should reflect what care actually costs in the area where you plan to receive care — not a national average.
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Inflation protection keeps your benefit from being eroded by rising care costs. Compound inflation protection is more valuable than simple — and costs more.
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The elimination period is the number of days you pay out of pocket before benefits begin. A longer elimination period means lower premiums, but more cost upfront if you need care.
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Carrier financial strength matters. A policy is only as good as the company behind it. Look for carriers with strong, established ratings.
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The right combination of these features depends on your budget and your priorities — and the answer is different for everyone.
1. Benefit Period: How Long Will the Policy Pay?
The benefit period is the maximum length of time your policy will pay benefits. Common options are two years, three years, four years, five years, and unlimited (lifetime).
Most long-term care claims don’t last forever. The average claim runs about three years, which is why a three-year benefit period is the most common choice. But some conditions — particularly Alzheimer’s disease and other dementias — require care for eight to ten years or longer.
How to think about it: A longer benefit period means higher premiums. If your family has a history of dementia or you’re particularly concerned about a prolonged need, a longer benefit period may be worth the additional cost. If your primary concern is the cost of a typical nursing home stay or a few years of home care, a three-year period covers the majority of claims.
Shared benefit riders are also available for couples. These allow one spouse to draw on the other’s benefit pool if their own runs out — effectively creating a longer combined benefit without paying for the maximum benefit for each person separately.
2. Daily or Monthly Benefit Amount: How Much Will It Pay?
This is the maximum your policy pays per day or per month toward care costs. You choose the amount at the time of purchase.
The key is to match your benefit to local care costs. A $150 daily benefit might have been adequate ten years ago in some markets. In Massachusetts today, assisted living runs over $9,600 per month — more than $316 per day. A $150 daily benefit covers less than half of that.
When setting your benefit amount, find out what care actually costs in the area where you expect to receive care. Then decide how much of that cost you’ll cover with the policy and how much you’re comfortable paying out of pocket. Many people don’t need a policy to cover 100% of care costs — just enough to prevent care from depleting their savings.
3. Inflation Protection: Will Your Benefit Keep Up?
Care costs rise every year. A benefit that covers today’s care costs may cover much less in twenty years, when you actually need it. Inflation protection is what keeps your benefit growing.
Three versions exist:
Compound inflation protection — your benefit grows by a set percentage each year, compounded. A 3% compound rider doubles your benefit in roughly 24 years. This is the most powerful form of inflation protection, and the most expensive.
Simple inflation protection — your benefit grows by a fixed dollar amount each year based on the original benefit. Less powerful than compound over long periods.
No inflation protection — your benefit stays the same. This is the lowest premium option, but it carries real long-term risk. Someone buying a policy at 55 and not using it until 80 will be collecting a 2026 benefit in 2051.
Our view: For anyone purchasing a policy more than ten to fifteen years before they expect to need it, inflation protection is worth serious consideration. Home care costs in Massachusetts rose 7.9% annually from 2019 to 2024 — significantly faster than a 3% compound rider would cover. Some coverage is better than none, but the purchasing power of your benefit at claim time deserves attention.
4. Elimination Period: Your “Time Deductible”
The elimination period is the number of days you must pay for qualifying care yourself before the policy begins paying benefits. It works like a deductible — but measured in time, not dollars.
Common elimination periods are 30, 60, and 90 days. The longer the elimination period, the lower your premium.
How to think about it: A 90-day elimination period means that if you need care, you’ll pay for the first three months out of pocket before benefits begin. At Massachusetts care costs, that’s potentially $25,000 to $50,000 or more before the policy engages. Some people are comfortable with that — they’d rather have a lower premium and absorb a portion of the early cost. Others prefer a shorter elimination period and accept the higher premium in exchange for earlier benefit access.
One practical note: the elimination period is usually satisfied by counting calendar days of qualifying care. If you receive care intermittently — some days but not others — the clock may take longer to run.
5. Care Settings: What Does the Policy Cover?
Not all policies cover every care setting equally. Before purchasing, confirm that the policy covers:
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Care at home — including care provided by a licensed home care agency and, in some policies, by an approved informal caregiver
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Assisted living — including room and board for care needs (though some policies only cover the care services portion, not the housing)
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Memory care and adult day care
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Nursing home care
A policy that only covers nursing home care is not a comprehensive long-term care policy. Most people strongly prefer to remain at home as long as possible — and a policy that only activates in a nursing home setting doesn’t serve that preference.
6. Carrier Financial Strength: Is the Company Going to Be There?
A long-term care insurance policy is a promise from an insurance company to pay benefits — potentially decades from now. The financial strength of the company behind that promise matters.
What to look for: AM Best ratings are the most widely used measure of insurance carrier financial strength. A rating of A- or better is generally a reasonable threshold for a long-term care policy. Carriers rated A or A+ have demonstrated sustained financial stability.
Why it matters: The LTC insurance industry has seen carriers exit the market over the past two decades as claims came in higher than originally projected. The carriers that remain are the ones that priced their policies more conservatively, maintained sufficient reserves, and have the financial depth to pay long-term claims.
A practical check: Before purchasing, ask your agent: How long has this carrier been in the LTC insurance market? Have they had rate increases on existing policyholders? What is their current AM Best rating? These are reasonable questions, and any experienced agent should be able to answer them directly.
Putting It Together: What’s the Right Policy for You?
There’s no universal right answer on benefit period, benefit amount, inflation protection, elimination period, or carrier. The right combination depends on your age, your health, what care costs in your area, how much of the cost you can absorb yourself, and what you can realistically sustain in premiums over time.
What’s always true: the best policy is one you can afford to keep. A generous benefit with a premium you’ll struggle to pay is less useful than a more modest policy with a premium you’ll carry through retirement.
That’s the conversation an independent agent can help you navigate — looking at your specific situation across multiple carriers, not steering you toward one product.
This completes the three-part series on long-term care insurance. If you have questions or would like to look at what’s available in New Hampshire or Massachusetts for your situation, we’re glad to help.
📞 (800) 927-9326 | ✉️
📰 Related: Part 1: What Is Long-Term Care Insurance? · Part 2: Types of Long-Term Care Insurance · What Is Long-Term Care — and Does Medicare Cover It?
