You’re probably not anticipating spending part of your retirement in a long-term care facility or having skilled nursing care come to your home to assist you with daily activities. However, the odds are that you will need some type of long-term care, since about 69% of all people over 65 will need it. There are only nine companies that still offer traditional long-term care insurance, and some of the worst companies have stopped selling long-term care insurance altogether. If you want to by long-term care insurance, you’ll want to avoid these 5 companies.
Mass Mutual: Too expensive
Mass Mutual was never competitive as far as pricing for its long-term care insurance. It’s probably a good thing that as of January 28th, 2021 they will no longer offer long-term care insurance. If you already have a policy through Mass Mutual, they will continue to honor those. See the full review of MassMutual’s long-term care insurance.
Genworth Financial: Premiums increased by 150%, which resulted in a class action lawsuit
Genworth used to be a major player in the long-term care insurance market. Now they only sell policies through employers, or direct to consumer channels. Genworth’s long term care insurance was the subject of a class action lawsuit, which was recently settled it for $24.5 million. The suit was based on the astronomical increases in premiums that customers were either forced to pay or to stop paying and let their policy lapse. These people were told their premiums would not increase, and then Genworth increased rates by as much as 150%. See the full review of Genworth Financial’s long-term care insurance
New York Life: Very expensive and lots of complaints
New York Life is endorsed by the AARP, but that doesn’t mean they offer a great long-term care policy. It’s also one of the most expensive long-term care insurance, sometimes by almost twice the amount of other companies offering long-term care insurance. Also, if you don’t qualify for the top tier classification due to health, you will only be eligible for some benefits, not all. There are many complaints about New York Life in general on Consumer Affairs, including their long-term care insurance. See the full review of New York Life’s long-term care insurance
AARP Long-Term Care Insurance: The same as New York Life long-term care insurance
AARP is a trusted name among the senior population. They offer a lot of useful content to guide the senior consumers into their retirement and and specific benefits for the seniors. They also create a vibrant community of seniors to stay in touch and learn from one another. AARP partners with New York Life to provide long-term care insurance. It is exactly the same New York Life’s long-term care insurance product, now just cobranded with AARP. If you trust AARP name, be careful with the AARP long-term care insurance product since it is as bad as the New York Life’s long-term care insurance.
CalPERS: Massive premium increases which resulted in class action lawsuit
Technically, CalPERS has “suspended open enrollment” in the long term care program. Just in case they get back to it (which is unlikely) you should know that they are also the subject of a class action lawsuit due to rate hikes and reduced benefits. Just days ago, they approved a 77% rate increase for current LTC customers. This is on top of the 85% increases they instituted in both 2015 and 2016, which led to the class action lawsuit in the first place. See the full review of CalPERS’s long term care insurance.
The 3 Best Traditional Long-Term Care Insurance Companies
If you’re wondering what companies still offer decent traditional long-term care insurance, consider the following 3 companies: (click on the links to read the full review of these companies and their traditional long-care insurance products)
- Mutual of Omaha: Best for flexibility
- Transamerica: Best for the best rates and guaranteed rates
- National Guardian Life: Best for couples
You can learn more details of these companies, including their long-term insurance quotes, in our more comprehensive analysis of these 3 companies in our roundup of the 3 best traditional long-term care insurance companies.
The 5 Best Hybrid Long-Term Care Insurance Companies
In addition, you can also consider alternatives to traditional long-term care insurance. One of the most popular options is a hybrid long-term care insurance policy, or also called linked policy. Below are our recommendation of the best 5 hybrid long-term care insurance companies for your consideration (click on the links below to read the full review of these hybrid policies)
- OneAmerica Asset Care: Best for couples
- Nationwide Care Matters: Best for cash indemnity policy
- Securian SecureCare: Best value
- Lincoln Financial MoneyGuard: Best for no elimination period
- Pacific Life Premier Care Choice: Best for flexibility
Life Insurance Policies with Long-Term Care Rider
Another alternative is to buy a permanent life insurance policy with a long term care rider. This is similar to a hybrid policy, but with more life insurance benefits and features. Here are the best life insurance policies with long-term care rider and how it works.
8 Alternatives to Traditional Long-Term Care Insurance
It is very likely that you will need some form of long-term care when you get older. Actually more than 70% of people of 65 or older in the US need long-term care. As healthcare costs increase, long-term care costs also increase significantly. Without proper preparation, going bankrupt during retirement is a very likely possibility.
Traditional long-term care insurance is very expensive and unpredictable. Several insurance companies have increased premiums on their long-term care insurance policies so much and so often that they have become the targets of several class action law suits across the states. This has also caused many companies exit the long-term care insurance market, leaving just a handful providers in this market and struggling.
The good news is that traditional long-term care insurance isn’t the only solution to this expensive problem. There are another 8 alternatives to traditional long-term care insurance that you can consider: hybrid linked life insurance and long-term care insurance policies; life insurance with chronic illness rider or long-term care rider; medicaid, annuities; reverse mortgage; HSA account; or self-funding.
What is Long-Term Care Insurance?
Long-term care insurance will pay for your long-term care expenses such as assisted living, nursing home stays, in-home care, and adult day care services, when you are qualified for long-term care. You are qualified for long-term care when you need assistance for 2 out of 6 activities of daily living (or ADLs) such as bathing, toileting, eating, getting around, grooming, and dressing.
Private health insurance, medicare, or disability insurance doesn’t pay for long-term care expenses.
Of course, traditional long-term care insurance has its own strengths and weaknesses that you should be aware of.
What is Hybrid Long-Term Care Insurance?
One of the disadvantages of traditional long-term care insurance is that after paying a lot of money for it, if you end up with not needing it, you will get nothing from your policy. To address this concern, hybrid long-term care insurance was introduced. It is a linked policy of a permanent life insurance policy and a long-term care insurance policy.
If you have a hybrid long-term care insurance policy and you end up with not needing it, you can either get your premiums back or your family will receive a tax-free death benefit as if you owned a permanent life insurance policy. It also offers several other benefits, yet still has its own limitations. Learn more about the pros and cons of hybrid long-term care insurance.
Hybrid long-term care insurance has become more and more popular recently.
How Much does Long-Term Care Insurance Cost?
Long-term care is expensive, so is long-term care insurance. The younger you buy a long-term care insurance policy, the cheaper you can get. The best age to buy a long-term care insurance policy is in your early 50s or late 40s. And of course, your health condition plays a big role in the premiums of your long-term care policy.
Below are the long-term insurance costs (annual premiums) in several scenarios, assuming good health and pay premiums for 10 years. For traditional long-term insurance quotes, we got them from National Guardian Life, one of the top providers remaining in this market. (full review of National Guardian Life long-term care insurance).
- A traditional long-term insurance policy with a total of $216,000 LTC benefit for 3 years can cost a 50-year old $2,000 to $3,000 a year; a 55-year old $2,200 – $3,400; a 60-year old $2,500 – $3,900 a year; and a 65-year old $13,500 – $14,700 a year
For hybrid long-term care insurance quotes, we got them from Securian Life Insurance company with its SecureCare hyrbdi long-term care product (full review here).
- A hybrid long-term insurance policy with a total of $216,000 LTC benefit for 3 years can cost a 50-year old $11,600 to $12,900 a year; a 55-year old $13,300 – $14,900; a 60-year old $15,000 – $17,100 a year; and a 65-year old $17,000 – $19,400 a year
- If you realize that you might not need LTC insurance anymore, you can either get all of your premiums back or leave a tax-free death benefit of 216,000 to your beneficiaries when you pass away.
| Age | Sex | Daily benefit | LTC benefits duration (years) | Total LTC benefits | Traditional LTC (National Guardian) | Traditional LTC with return premium benefit (National Guardian) | Hybrid LTC with return premium benefit (Securian) |
| 50 | M | $200 | 3 | $216,000 | $1,937 | $4,610 | $12,895 |
| 50 | F | $200 | 3 | $216,000 | $2,969 | $6,768 | $11,568 |
| 55 | M | $200 | 3 | $216,000 | $2,212 | $5,840 | $14,912 |
| 55 | F | $200 | 3 | $216,000 | $3,350 | $8,317 | $13,290 |
| 60 | M | $200 | 3 | $216,000 | $2,528 | $7,433 | $17,124 |
| 60 | F | $200 | 3 | $216,000 | $3,885 | $10,218 | $15,029 |
| 65 | M | $200 | 3 | $216,000 | $3,434 | $13,531 | $19,399 |
| 65 | F | $200 | 3 | $216,000 | $5,222 | $14,672 | $17,015 |
>>MORE: How Much does Long-Term Care Insurance Cost?
Is Long-Term Care Insurance Worth It?
70% of people who are 65 or older will need some form of long-term care. The cost of long-term care is expensive and continues to increase every year. One might argue that it should be mandatory for everyone to have long-term care insurance since the chance you will need long-term care is probably higher than the chance you will have a car accident and it is legally required to carry car insurance if you are driving.
If you don’t think you can pay for long-term care out of pocket, yes, you should have long-term care insurance. The next question is which long-term care insurance policy you should have: traditional or hybrid. The short answer is that it depends. If you can afford it, a hybrid long-term care insurance policy offers more benefits than drawbacks. If you can’t afford a hybrid policy, a traditional policy will suffice. However, make sure you choose the right company since there have been a lot of bad reputation of companies operating in this traditional long-term care insurance market. Here are the top 3 traditional long-term care insurance companies that we recommend.
Either way, make sure you compare long-term care insurance quotes from 3-5 best companies before making the final decision.
Who Needs Long-Term Care Insurance?
Unfortunately, 7 out of 10 people that are 65 or older will need long-term care. That means 7 out 10 people need long-term care insurance if they do not have enough money to pay for long-term care out of pocket. It is impossible to know if you will be in the group of 7 or the group of 3 when you are 65 or older. One might argue that long-term care insurance should be legally required since the chance for you to need long-term care is much higher than the chance for you to have car accidents, yet it is legally required to carry car insurance while driving.
If you want to enjoy your golden years, it is highly advisable to have a good long-term care insurance policy in place.
When Should You Buy Long-Term Care Insurance?
Similar to buying life insurance, the younger you are when you buy long-term care insurance, the cheaper the premiums are. Most people tend buy their long-term care insurance policies in their late 50s or early 60s, which might not be the best time. You should start looking into buying a long-term care insurance policy in your late 40s or early 50s to get the best price and choose to pay for the policy in 10 years so that you can still afford it as you are still working.
Some insurance companies allow you to buy a long-term care insurance policy as early as 40 years old. You should consider buying it as early as you could. The chance for you to need it after you pass 65 years old is 70%.
Last Thoughts
The long-term care market is very tricky, since when long-term care was first introduced, insurance companies drastically underestimated costs. They also miscalculated how many people would let the policies lapse. This led to a crisis in the long-term care market, and now very few companies still offer this insurance. However, if you qualify it may be something to consider as rates have evened out for the most part.