Does Long-Term Care Insurance Pay Off?
A long-term care policy costs tens of thousands of dollars in premiums over the years. Here is that cost set against the odds of needing care and what claims usually pay for.
A 60-year-old woman buying $165,000 of long-term care coverage pays about $4,450 a year. Over 20 years that is roughly $89,000 in premiums before any benefit is paid. On the other side, there is a 70% chance she will need some paid long-term care after 65, and about a one-in-three chance she will never need any. Whether a policy pays off depends on both sets of numbers and on how much risk your savings can absorb.
Is long-term care insurance worth it? Most articles answer a narrower question, whether the premium is tax-deductible. The useful comparison is what the policy costs against what it is likely to pay.
What the premium side costs
Figures from the American Association for Long-Term Care Insurance's 2026 Price Index, for a $165,000 initial benefit pool:
| Buyer | Annual premium | Paid over 20 years, with no rate increases |
|---|---|---|
| Single woman, age 60 | About $4,450 | About $89,000 |
| Couple, both age 55 (combined) | About $5,010 | About $100,200 |
| Couple, both age 65 (combined) | About $7,030 | About $140,600 |
Age at purchase affects the price more than anything else. Health matters too, since insurers can decline applicants with certain conditions, and the chance of being declined rises with age.
The 20-year totals assume the premium never changes. Many long-term care policies have had rate increases after purchase, sometimes large ones. Ask any insurer for its history of rate increases on policies already sold.
What the benefit side looks like
The Administration for Community Living estimates that someone turning 65 today has almost a 70% chance of needing some paid long-term care. The same data shows that about one-third of 65-year-olds will never need it, and about 20% will need it for more than five years. That last group is the one a policy protects most.
Claims data from the American Association for Long-Term Care Insurance shows how claims end:
- about 67% end because the policyholder dies
- 20% end because the person recovers and no longer needs paid care
- 13% end because the benefit pool is used up
So most people who claim do not exhaust their policy.
The three outcomes, side by side
Never needs care (about 1 in 3)
All premiums paid and no benefit collected. For this group the policy is a cost, like any insurance that is never claimed on.
Needs care, claim ends before the pool is used up (most claimants)
Benefits pay for home care, assisted living or nursing care that would otherwise come out of savings.
Needs extended care, benefit pool exhausted (about 13% of claims)
The policy pays its full value and the person still needs care. Medicaid's long-term care rules typically apply after that.
What kind of care gets claimed
Over half of claims (51.5%) begin as payment for home care. Assisted living accounts for 24.5% and nursing care for 23%. Fewer than a quarter of claims start with a nursing home.
To put the benefit pool in terms of care, national median costs in the 2025 CareScout survey are $6,200 a month for assisted living and $9,581 for a semi-private nursing home room. A $165,000 pool would pay for about 27 months of assisted living or about 17 months in a nursing home at those prices, before any inflation growth in the policy.
So does it pay off?
It depends mainly on your savings.
- You could pay for several years of care from savings without harming your spouse's finances. Insurance is less necessary, since about a third of buyers never collect.
- A long care need would drain your savings, and you can afford the premiums comfortably, including possible increases. This is the group a policy is built for, and buying in your mid-50s to early 60s costs less than waiting.
- You have limited savings and income. Premiums may be hard to keep up, and a lapsed policy pays nothing. Medicaid is the more likely source of long-term care coverage. See our long-term care Medicaid estimator.
Questions to ask before buying:
- What is the daily or monthly benefit, and how long does it last?
- Is there inflation protection, and at what rate?
- How long is the waiting period before benefits start? It is often 90 days.
- What rate increases has this insurer made on existing policies?
- Does it cover home care as well as facility care?
Premiums on a tax-qualified policy count as a medical expense up to an age-based limit if you itemize. Our LTC Insurance Tax Deduction Calculator shows the amount.
Frequently Asked Questions
Is long-term care insurance worth it?
It depends on your odds of needing care, whether you could pay for care from savings, and how many years you pay premiums before a claim. About 70% of people turning 65 will need some long-term care, and about a third never will.
What percentage of long-term care insurance claims actually get used?
Policies that are claimed on generally do pay. But many policyholders never file a claim, because about a third of 65-year-olds never need paid long-term care.
How much does long-term care insurance cost?
About $4,450 a year for a 60-year-old woman buying a $165,000 benefit pool, or about $5,010 a year combined for a 55-year-old couple buying the same coverage each, according to the 2026 AALTCI Price Index. The price rises with age at purchase.
How do most long-term care insurance claims end?
About 67% end because the policyholder dies, 20% because the person recovers and no longer needs care, and 13% because the benefit pool is used up.
This article is for general educational purposes and reflects national industry and government data as of October 2026. It is not financial, insurance or legal advice. Consult a licensed insurance professional about your own situation.